Children are unaware of the importance of money. Many school programs skip teaching them the fundamentals of financial literacy. Years later when they’re thrust into the real world, they have to play catch up and learn through trial and error on how to manage money. Luckily, this doesn’t have to be case and there’s plenty of resources online on how to teach money lessons to your children.
Here are some important money lessons children should learn early in life.
Establish the Foundation of Money
Before you teach your children various money tips, establish the foundation of money in their minds. Teach them the value of coins and bills, and the concept of money used as a way to pay for goods and services. Use the concept of a money jar and encourage them to save and grow their money.
Show Them How It’s Done
Until the age of seven, children mimic whatever you do – so it’s time to show them how it’s done. Lead by example, avoid impulsive shopping, arguing about money, and spending money frivolously. The way you handle money as a parent is how your child learns too. Because of this, communicate how you make spending decisions so they learn from a young age.
Teach Them That Things Cost Money
Your job isn’t about notifying your children or grandchildren that the toy car you bought cost $5. Instead, your job is to teach them that things cost money.
One of the best ways to teach kids about money is to ask them to grab a $5 bill from their money jar and take them to a store. Then, ask them to hand over the cash at the counter physically – this simple act will be more effective than a lecture.
Stress the Importance of Saving
Tell your children how and why it’s essential to save money. Open a savings account and explain to them how it can do wonders. Moreover, slowly and gradually introduce them to the nitty-gritty details related to banking money tips.
Commissions Over Allowances
From the start, teach your children to earn money rather than handing them money. Assign commissions to daily house chores instead of just handing them out money every morning before they go to school. This will educate them on the notion that money is earned from hard work and must be spent wisely.
Giving > Taking
Once your child knows about money and starts to earn a bit, teach them the art of giving rather than taking. It’s one of the best ways to teach kids about money. They’ll learn that taking money isn’t everything, but giving is also a big part of our world.
Let Your Children Earn Money
Now it’s time for you to let loose your children from the home-based commissions and build an income from the outside world. Working for people on the outside will automatically help your children to like life-long lessons. Some ways to do this are letting them take summer jobs be it simple things such as mowing the neighbors’ lawn or shoveling snow.
Teach Them the Boundaries of Money
Teach your children that driving a Lamborghini will not result in happiness. Tell them that spending thousands of dollars on a birthday party can’t guarantee life-long memories. Long story short, teach them the boundaries of money.
Introduce the Concepts of Credit, Budget & Banking
Once your children are earning and have learned all the essential money tips, it’s time to introduce concepts like credit, budget, and banking. Teaching them the pros and cons of credit, how to create a budget, and banking procedures will aid them in the future.
If not spent right, money can drive anyone crazy. Use these important money lessons we have provided to teach your children how to use money effectively and wisely.