The older we get, the more we realize how crucial financial skills are to surviving and navigating life. Too bad though, schools don’t seem to teach our children enough about money and how to manage it.
As a parent, teaching your kids critical financial lessons is a great way to prepare them for the life that’s ahead of them.
But where to begin, you ask?
These key money management lessons we have compiled should be an excellent place to start.
1. Money Does Not Grow On Trees
Financial literacy starts with the understanding that money is a finite resource. Your kids have to realize early on that money does not grow on trees or simply pop out of the ATM; it is a product of hard work, and banks are just establishments that keep them safe for you.
To get your point across, teach your kids how to earn their own money by paying them for doing extra chores around the house. When they’re older, encourage them to get part-time jobs. Not only will this give them a taste of how the real world operates, but it will also help them develop a better work ethic.
2. Wants vs. Needs
Sound financial decisions begin with distinguishing needs from wants. You don’t have to wait for your kids to get older to teach them what’s necessary and what isn’t.
Make your children understand that some expenses have to come first, while others can wait ‘til later or when you have extra money as they’re not essential to day to day living.
3. Delayed Gratification
They say good things come to those who wait. Delaying gratification, however, is something that even adults have a hard time coming to terms with.
Teach kids at an early age that they can’t have everything they want in an instant. Learning to save and prioritize before buying something can have a significant impact on how they handle their finances when they become adults. As parents, you have to reinforce the idea that waiting pays off especially if the goal is worth the wait.
4. Saving For The Rainy Days
Your kids are never too young to start saving. Encourage them to save not because they want to buy something but because the money might come in handy in the future. Instill in them the importance of pausing and weighing the costs before spending. This may be a difficult concept to grasp at first, but later on, it can develop into a habit that they can very much benefit from.
5. Spending Money Wisely
Train your children how to get the most value out of every dollar. Just because they can afford it does not mean they have to buy it. Teach them how to compare prices; explain to them the concept of holiday sales and discount coupons. Help them understand that, sometimes, it wiser to wait it out, especially when buying items that easily depreciate.
6. Living Within Their Means
Of course, you can’t effectively teach your kids the value of money without letting them manage their expenses. Giving them an allowance and making them budget it on their own will help them see how important it is to control their spending. In fact, blowing their allowance can be a good thing; it will teach them to be more conscious of their expenses, else they have to deal with the consequences.
7. How Credit Works
If you want your children to grow up to be financially responsible adults, you have to give them a better understanding of credit and what it entails. They have to be aware of the dangers of debt and how borrowing money can come at a cost. While credit is not bad, one must be sure of his ability to pay or risk getting into trouble.
8. The Value of Investing
Teaching your children the value of investing will not only introduce to them to the idea of using money to make more money but also trigger them to make smarter financial decisions. More importantly, it will encourage them to take risks for the possibility of gaining much more.
9. Setting Financial Goals
Children are impulsive by nature, so it can be tricky for them to set priorities. However, just like adults, they can be capable of making sacrifices for something that they really want. Train your kids to set financial goals by pushing them to make plans for the money they earn or receive. Help them set realistic targets and encourage them to keep on saving until those targets are met.
10. Sharing and Giving Back
Giving is an essential aspect of financial management. Whether it’s for the church, the community, or family members, children, as young as they are, have to be acquainted with the value of sharing what they have to those who need it.
They say you can’t give what you don’t have. Well, in this particular case, you can’t teach what you don’t know. If you want to raise financially literate children who know how to value money, you have to learn as much as you can about it first and then set a good example. Nowadays, adults can’t just pull the old “do as I say” parenting style. Kids tend to follow what you do, not what you say.
About The Author Bio
Samantha Green is the Content Marketing Strategist for BusyKid, the first and only chore and allowance platform where kids can earn, save, share, spend, and invest their allowance. A mom of two, she enjoys spending time with her kids and reading books to them.
