Warren Buffett is the CEO of Berkshire Hathaway, a multinational conglomerate holding company headquartered in the United States. In the world of investing, he is considered a famous figure. As of December 2020, he has a net worth of over 85.6 billion USD, which puts him in the top five list of the wealthiest people.
Teaching your kids about money can be an intimidating task. But grasp a tip or two from Buffett, and maybe it might change your perspective on that. Take it from the man himself on five ways to teach your children about money.
#1: Start early
Habits are built over time, and overnight efforts are risky. If you want your little ones to grow up with practical financial skills they can demonstrate and pass on to the next generation, start now.
“Sometimes parents wait until their kids are in their teens before they start talking about managing money — when they could be starting when their kids are in preschool,” Buffett told CNBC.
Now, at this point, we see some raised eyebrows over the screen. Is it possible to teach a preschooler about financial literacy? Yes if you’re not referring to the ever-complicated stock market.
As you spend time with your children shopping and dining out, use opportunities to explain that tapping a card to make payment is not as simple as it seems. To do so, clarify that it takes time and effort to earn money and that they should not spend as they please.
#2: Educate on the value of saving
After getting a headstart on the topic of money, you want to enlighten your kids on the value of saving. Buffett says that even saving a little bit of money regularly pays off. When it comes to money, even the cents count.
“Instead of spending money on a soda, which you don’t really need, put it in savings, and it will make even more money for you by earning interest.”
But lest you become naggy and fill your children with empty words, put it to action. You can open a child’s savings account and bring your kid along to the bank for their first deposit. Think of it as a field trip to teach them on the value of saving and don’t underestimate the impact it can have in the long run.
#3: Walk the talk
You can continue to blabber on about money-related topics, but if your daily actions show otherwise, it’s going to be just an irony. Worse still, it could confuse the little ones.
Buffett credits his father as a source of inspiration for building the right habits. “He was my hero when I was six, and he is still my hero now. He is an inspiration to me in every way. What I learned at an early age from him was to have the right habits early,” he stated in an interview with CNBC.
Children pick up habits from the things they see, and that’s why you want to walk the talk in your family’s financial decisions. You don’t have to be an expert investor to do so. Just keep yourself in check, which includes clearing credit card debts you’ve accumulated over time.
#4: Identify needs from wants
Truth be told, even adults struggle with separating needs from wants. Just look at the number of purchases you’ve made from 9.9, 10.10, 11.11, and 12.12. If you don’t want your children to pick up the habits, model and reveal to them the significant difference between needs and wants.
Buffett suggests having your kids create a list of 5 or 10 things they would like to purchase. Then, go through the list with them and label each item as a need or want. Don’t forget to explain why.
As you do your online shopping, seat your child beside you and show them that even when buying a necessary item, it’s essential to compare prices. Different sellers can price the same or similar product at varying prices, so searching for the most affordable piece is also a smart skill to acquire.
#5: Power-up their entrepreneurship
Did you know that when Buffett was just six years old, he earned his first few cents selling sticks of gum in the neighbourhood? Wanting to tap onto a better money-making opportunity, he moved on to selling Coke cans at a higher price than he bought it.
Asian parents are famed for being a wet blanket, and you don’t want to be one to your kid. Instead, encourage them to see money-making opportunities now can go a long way to fuel their entrepreneurial spirit down the road. Click through the link if you want to learn more on how to teach your kid to think like an entrepreneur.
As Don Bossi, former president of FIRST, a nonprofit organisation that helps young people foster innovations in the fields of science, technology, engineering and math (STEM) rightly assumes, “Kids are just a sponge.” Take time to teach and guide them about money, and they will soak up the right moves to face adulting.