Top 7 Important Money Lesson to Teach Your Kidsadmin
As your children grow up, it is important to introduce the concepts of financial responsibility as early as possible. Your kids need to know how to spend wisely, save and even invest money. These lessons will serve them well later in life and will ensure that they never waste or hoard.
Here are the top 7 money lessons you should teach your children:
The value of money
Your children need to understand that money comes from work and that it costs money to buy things. Kids need to understand that everything they enjoy costs money, from going out to eat to their favorite toy. Take them with you while shopping and show them how much things cost. Give them money to hand over at the counter, and they will understand that everything costs money. This will have a more lasting effect than yelling when they break things or lecturing them on value.
Start saving early
As soon as kids learn that money can be spent, they need to learn that money should be set aside for later. As they see you using money to purchase things, show them the wisdom behind saving money regularly.
Learning to save is not just an important financial habit. It teaches your kids discipline and delayed gratification. It also stresses the importance of preparedness and teaches the concepts of planning and goal setting, as well as building individuality and security.
You can get your kids accustomed to saving by getting them a savings jar or a piggy bank. They can deposit cash inside and only open it when it is completely full and cannot hold any more money.
You can also use some short but powerful messages to encourage a saving habit in your kids. These include statements like ‘I love to save’ or ‘saving is an awesome thing’. Such simple phrases tend to stick in your kids’ minds, and they will nurture the saving habit in them.
Another way you can encourage your kids to save is by opening a debit bank account for them. A debit card with parental controls is a great way to help your kids set money aside for the future.
This can be coupled with helping them set some short-term goals for the money. This can be a toy that they want or a game. Show them that they can set some money aside little by little until it is enough to get them what they want. This principle will make way for long-term goals such as starting a business or going on vacation when they are older.
How to earn money
Kids need to have their own streams of income, however small they may be. You can create avenues for them to earn money by paying them to run errands or do chores around the house. An allowance is also an effective way for kids to earn money. This will be less effective because they tend to value the money they earn more than the money they are given. Allowances also give kids a sense of entitlement, and you don’t want to set such a precedent in your kids.
Teach them how to spend wisely
On top of showing your kids the value of money, savings, and earning money, they need to know that money is meant to be spent. You can achieve this by introducing the concept of a budget.
Budgeting will enable your kids to manage their money and to know that money doesn’t grow on trees. It will also prepare them for the real world, where money is limited, and they are on their own.
Your kids need to learn that spending isn’t always about buying what you want when you want it. It is about prioritizing your needs first before your wants. You need to teach them that if they spend too much on one thing, they will have no money left for everything else and it is a result of poor spending habits. They also need to learn the consequences of impulse buying and that they don’t need to spend all their money just because they have it at hand.
Teach them the value of giving
If you value giving to others, you can instill the same value in your kids by showing them that money isn’t just for spending and saving, it also for sharing. Teach them how to give by creating separate money jars for them. These jars should be labeled clearly as spending, savings, and sharing.
You can give them a cause to give towards such as feeding the homeless or saving the environment, depending on the causes that matter to you. This will show them the satisfaction that comes with using money to make the world a better place.
Teach them how to multiply money
Your kids need to learn how to acquire and maintain wealth. They can learn this when you teach them how to invest. This can be as simple as showing them how to use their money to open a business, teaching them about profit, losses, sales, demand and supply, and other basic business concepts.
Something as simple as a lemonade stand can be an effective tool to teach your kids about investments and how to make their money grow.
Show them how to be a responsible financial model
Kids learn more by seeing than by hearing. If you are an irresponsible spender, it will be confusing when you teach your kids about saving and budgeting.
You need to make sure that your kids see the lessons you teach them from you. They need to see you saving and making smart spending decisions for them to understand how to do the same. Teach your older kids how to model responsible financial habits to their younger siblings or even their future kids.
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