9 Tips for Instilling Frugality in Children

Money management is a skill; the earlier a child learns it, the better it is in the long run. Parents hate it when their children spend unnecessarily, ask for more than their allowance, or run into debt.

Teaching your kids about budgeting, spending wisely, and saving at a young age will set a foundation for their financial future and help them avoid getting caught up in debt traps.

Read on to learn 9 ways to teach children how to be frugal.

Talk About Money Openly

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Many parents don’t like to talk about money before their children, thinking they are too young to understand money. Don’t do that. Discuss monthly expenses with them and gradually increase the depth of your financial conversations with them. Let children understand that money comes into the house because the parents work and that money helps buy everything that comes into the household. If you are anxious about money, talk to them in an age-appropriate manner. Discuss how much you make, how much you save, and your end goals. Tell them if you intend to pay off your mortgage, put aside money for a holiday, or save for their college education.

Practice Frugality

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Teaching frugality works when you lead by example. You can’t tell your children not to order drinks with pizza when you order them every time you eat out or tell them no for the cinema and then impulse buy an expensive dress. Children observe everything and pick up your habits. They see you looking for a bargain or putting back a particular brand of peanut butter because it is overpriced. Hence, be careful about what you intend them to see and practice.

Teach Them About Necessities Versus Wants

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Children should know the necessities like food, water, shelter, and clothing and that everything above and beyond those are just wants. Wants are fulfilled, too, according to a few parameters like a household’s income, family lifestyle, and the importance and relevance of the expenditure. For example, buying a pair of trainers is important if a child is going on a trekking trip, but it doesn’t have to be branded.

Teach Them To Manage Expenses

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Introduce the concept of income and expenses to children above ten years of age. Start giving them a small allowance and encourage them to earn income from taking out trash, walking dogs, and washing cars. Teach them how to use this income to meet their expenses and that it’s essential to keep their income higher than theirs. If they need a new dress and their income falls short, they need to save to be able to buy it.

Encourage Them To Reuse And Be Resourceful

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Instead of buying new things, encourage them to wear hand-me-downs from elder siblings or gently used items from thrift stores at a fraction of the cost. They can get more toys or items if they get them secondhand from garage sales. Teach them to mend clothes or shoes and repurpose items for school activities. Teach them to look for bargains. Take them with you on shopping trips and let them see you looking for bargains or buying bakery items because they are being sold at reduced prices. Teach them to buy with coupons to save more. Furthermore, they should be taught to save resources and energy by turning off lights when they leave a room and turning off faucets while brushing their teeth. These frugal habits go a long way in saving money.

Teach Them Delayed Gratification

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Children often want things instantly and can get frustrated if that doesn’t happen. It is essential to teach them the importance of patience and discipline. Teach them they don’t have to buy the first item their eye catches; it is better to wait for a day or two, and if they still want it, they can buy it.

Encourage Them To Live Within Their Means

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Teach your children the importance of living within their means and how precarious it can be to rely on borrowed money. Warn them about the lure of credit cards and how easy it is to fall into debt traps if not careful. Teach them when they are young so they can grow up financially literate and money-wise.

Involve Them In Budgeting

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Teach children about budgeting by talking to them about grocery shopping and household expenses. Involve them in small decision-making, like ordering pizza on Wednesday as they run offers that day, or if they save enough by turning the lights off or walking instead of taking the car, they can go on a picnic. They would want to save money when they see the rewards. To older children, you can ask them to prepare their budget for items such as food, entertainment, school, and sports activities. When they make bad decisions, talk them through it and show them how things could have been done differently.

Encourage Saving

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Once you have taught your children about budgeting, it is time to teach them about saving and investing so their money can be used in the future. Of course, it starts small and simple with just setting up a piggy bank, but when your children enter preteen, it is better to set up a savings account. Let them handle their bank account where they can see how the money they deposit or invest increases with time using specific financial instruments.

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