Raising money smart kids should be a goal of every parent. By making sure your child is smart with money, you can rest easy knowing they won’t get in over their heads with consumer debt or need to be bailed out from making poor financial decisions.
Not only will money not be a stress in their lives, but knowing they can take care of themselves financially will ease your stress as well. So how do you raise money smart kids regardless if you are good with money? This post is going to highlight 3 tips that you can start teaching them today so that it becomes a habit for them.
#1. Teach Them To Be Patient
We live in a fast paced world and everyone wants what they want now. The idea of waiting is foreign to most kids and even most adults. In order to be smart with money, you have to teach your children to be patient. They don’t need everything right this minute.
That new video game will still be around when they can afford to buy it. It will still be just as fun to play. In the off chance that video game is no longer the “it” thing, you can use that as a teaching moment as well.
Show them how quickly their interests change and that the video game was just a passing fad. I’m not saying you never buy something your children want, but you shouldn’t buy them everything they want the moment they want it. This just sets them up for poor money habits in the future.
#2. Explain Wants And Needs
It’s never too early to teach your children the difference between wants and needs. While some things that you want and need may be hard for them to understand, try to break it down to their level. Show them that toys are wants and clothing is a need.
A good pair of sneakers is a need but an extra pair or a pair that costs $300 is a want. You can even teach them about wants and needs in everyday life. Take them grocery shopping with you and ask them if certain things are wants or needs.
They will quickly be able to connect the dots as to what is a want and a need. Then you can combine this lesson with the point above about patience.
#3. Involve Them In The Budget
Another way to raise money smart kids is to include them in the household budget. How involved you make them is a personal decision. You might not want to open up the entire budget to them for fear they will tell their friends how much money you make. But you should involve them somewhat.
Show them some income and how you apply that to expenses. Show them how you first cover needs like housing, food and savings before wants like vacations and entertainment.
If they have a job and earn a little money, help them to set up a budget. Have them put some money away for their needs and savings before they can put money towards their wants. The more real you make it, the more fun they will have and the more likely they will stick with it in the long run. Outside of a budget, the only other alternative is to simply make more money on the side, having diversified income streams, but that is for a whole other blog post.
Final Thoughts
Raising money smart kids isn’t as hard as you might think. Even if you are bad with money, teaching your kids just some basic concepts will put them on a path of good money skills. If you can teach them the difference between wants and needs, show them how to budget, and to be patient, they will have the knowledge they need to make smart money decisions.
And who knows, you might even learn something yourself and improve your money situation too!
Author Bio: Jon blogs at PennyThots, a personal finance blog that helps readers improve their finances one day at a time.