Parents who want to raise financially prudent kids must be intentional about it. My daughter used her savings to buy three apples, which was the most hilarious thing that happened in my house last year. When I asked her why, she said Mum, you told me to always save for everything I want. Oh, true, I taught her to save, but I didn’t teach her how to spend the money wisely. So she managed to save every penny, and after it had accumulated to about three hundred naira, she spent it all on apples.  Most kids today don’t really have a problem with saving money. In fact, I think they are always eager to fill up their piggy bank with money and even compete with their siblings on who saves more. 

The problem is after saving money then what happens? Should we just go about lavishing the money on everything the eyes pick? Here are 5 prudent ways to teach kids to spend wisely.

Teach them to plan

The first step is to teach kids the Importance of planning. Therefore kids must be taught how to organize their money, teach them that a  certain percentage of their money should be saved and the percentage for spending should be properly budgeted.  This planning process helps prepare your kids for rainy days. People who spend it all as they come end up in square zero. See some celebrities that went from rich to broke. 

Teach kids how to budget 

Budgeting is a simple concept that can be difficult in practice but helping kids understand this early enough will make them conscious of it when they become adults. A budget is a financial plan for a defined period of time. It helps kids to plan their spending and also ensure that they have enough money for the things they need and that are important. You can get your kids active on some simple budgeting apps on their mobile devices or let them watch you make a budget for the things you want to buy in the mall or market. 

Help kids know the difference between a need and a want.

Teaching kids how to know the difference between a need and a want help them distinguish between what is most important to what is less important. Explain that needs include the basics, such as food, shelter, and clothing, and wants are all the extras. Use relatable examples to teach them to distinguish between wants and needs and how to prioritise. For example, teach your kids that if they are faced with either buying a new crayon for a history project or a pack of candy, the pack of candy at that moment is not necessary but the new crayon is.

Teach kids to avoid impulse buying 

Kids must be prudent and diligent with their spending, encourage your child to plan and sleep on their decision to buy anything or wait for at least a day before they go ahead to purchase it. If it’s still a desire after that, then see if it falls within budget before making a decision to buy.

Teach kids by being a good example.

If you want your kids to be good spenders, being one yourself will help, Kids notice these things. For example, if you are buying things on impulse then be sure your child will take after you. So whenever you are at a store with your kids, avoid the urge to buy things that you don’t necessarily need or going for everything that catches the attention of your eyes.

It’s never too early to teach kids about how to budget, spend wisely, and also responsibly. Money earned and saved little by little fosters a healthy financial attitude for life. If you want a fun learning material to teach kids financial literacy, our financial literacy activity book is your best pick. Click here to check it out.