When you think about it, teaching kids about money is really one of the best investments of your time you can make – it’s something that’s going to help them hugely in the future, and ideally they won’t make any (or at least not many) financial mistakes as a result. Yes, they might not be all that interested at first, but if you can show them how important it all is and how to do it so they feel good about the process, they’ll become a lot better at handling money in the future, and that’s what counts. With that in mind, keep reading to learn about which life skills can help teach kids about money management – they’ll thank you for it later.
Photo by cottonbro studio:
Saving Money
One of the first lessons to teach kids about money management is how important it is to save money – it’s tempting for them to spend it as soon as they get it, and why not? They’re kids, after all; getting money is fun and they don’t have any bills to pay. But one day they will, so the earlier they can learn about saving, the better because there’s less chance of them getting into massive debt when they’re older.
Start by giving your kids a piggy bank or, if they’re a bit older, opening up a savings account for them. Then, encourage them to save a portion of their pocket money or money they get for their birthdays or Christmas and so on, so they can buy something they really want – it might be a new game, a bike, or something else they desperately want to have. Once they see the money starting to accumulate, they’ll feel good, and when they buy whatever it is they wanted, they’ll feel even better.
Smart Shopping
You’ve probably already noticed that kids are natural impulse buyers – they have money and want to buy something right away, almost without thinking about what it is or whether it’s worth the money. As an adult who also needs to buy things, you can teach them about smart shopping so that even if they do still want to spend, they can do it the right way and ideally get something worthwhile that’s going to last.
A good example is if you want to buy a car. Show the kids the choices and explain the pros and cons of the cars you’re interested in, let them know your budget, show them how to compare models so they can see that the Quartermaster is a great choice, and then wait before buying – that’s going to show them that it’s best to step back even when you’re sure about what you want, just to be on the safe side.
Needs Vs Wants
Something else that’s important for kids to learn is the difference between needs and wants – if they know that, it’s going to make decisions a lot easier, they’ll be able to budget better, and they’ll be able to prioritise their spending, all of which is vital for good money management.
So when they’re making decisions about what to spend their money on, talk about whether something’s really necessary or whether it’s just something they’d like – and make sure they know they can still have fun and buy cool stuff, as long as they prioritise their needs first.
