Communication: Vital Ingredient In Teaching Kids To Save Money

By: Ricky Oo

Parents sometimes do not realize how important the effective communcation is between them and their kids. They are often too busy to teach thier own kids about money and kids do not get to learn anything from their parents.

Do you know that half of US children population have never had a convesation about money management with their parents, according to a recent survey? This is a wake up call for parents to start teaching kids about money, to save, to budget, to invest, and to be wise with money.

It is important that kids know and understand what they are doing with their money. The earlier the money education gets started, the better it is. It is also important to have intimate discussions on money matters with kids. Interact with them on the topic and let them ask you questions. Get kids to be involved with family budget discussions.

Sometimes though, dinner table conversations are as effective as classroom learning. In an informal setting like dinner, parents and children can chat about almost everything while being relaxed and discuss the day's events. So why not take on this golden opportunity to talk to your kids about money. Don't bore them by talking about the history of the stock markets, but talk about something like how a kid's idea has become an internatioal company.

Encourage kids to talk to you about any money concerns they may have. Setting a set time to talk about money issues will keep everyone a little more serious about it. For younger children, parents can talk to them about the differences between cash, credit cards, cheques and loans - the basics. For teenagers, the discussion should be on more complex topics such as economics, inflation, exchange rates, jobs, mutual funds, stocks, bonds, term deposits or anything that is of particular interest to them.

Experts suggest that five fundamentals of financial fitness if learned before age 30, can lead to a financially sound lifetime. They are: saving 10 percent of earnings, taking advantage of retirement plan through your job, working towards owning a house, having enough liquidity to deal with an emergency and importantly avoiding debt. Budgeting and saving habits will determine the children's future financial health and communication between the parents and children is no doubt very important to help foster these fundamentals.

Parents should note that every child is different. Just because your neighbour's kids love calculators, do not expect your kids for the same. As parents, it is assumed that they know their kids best. Parents should recognise the children's personality, strengths & weakness and personal traits and best means of communication with them when it comes to money. Do not give them pressure by saying what other kids are doing well. Some kids may like counting money on calculator. Some kids may like more visuals. Some kids may prefer do it on computer. Maybe kids may not like numbers at all. It is important to recognise kids' personalities and try to educate them in the most effective way about money.

Article Source: http://yourfinance.co.za

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