10 Essential Money Management Lessons To Benefit Your Kids
School teaches your children many things, but money management isn’t one of them. Their only chance of learning about financial matters and being financially responsible at a young age would be you, their parents.
Your children are never too young to be exposed to money matters. In fact, it’s better to start teaching financial literacy for kids so by the time they reach adulthood, they already know how to manage their finances with ease and live smoother lives as a result.
Here are ten essential ideas for money management lessons that will ultimately benefit your children.
1. Money is earned through hard work
Impress upon your kids that the food you eat, the clothes you wear, and all other expenses in the household are paid for by money earned through hard work. Kids need to know that money doesn’t grow on trees or simply come out of an ATM.
2. Saving up is important
Tell your children about the benefits of saving up for future use. If you give them an allowance for chores, encourage them to set aside some or even all of the money they earn using piggy banks or bank accounts.
3. Needs are a priority over wants
With your guidance, your children should be able to learn the difference between wants and needs. More importantly, teach them how needs should always take precedence over wants. You would also be teaching them about making priorities this way.
4. Creating budgets and sticking to them
It is not uncommon for kids to blow all their money in one sitting before they receive their next allowance. Teaching them how to create a budget and stick to it should help them correct that behavior.
5. Monitoring their spending
The act of tracking expenses is something kids need to learn, so they will know where all their money went. Knowing how they spent it can then give them an idea which expenses can be reduced or eliminated.
6. Credit talk
The world runs on credit, and therefore, it’s a concept that kids have to understand. Tell them how credit works so they’ll know that it can be both good and bad depending on certain circumstances and how they handle them.
7. The idea of delayed gratification
Kids (and many adults, really) tend to want instant gratification, that they must get what they want right away. That, of course, isn’t how the real world works. It would really help your kids if you make them understand the concept of delayed gratification and help them develop patience in the process.
8. Comparison shopping
A lesson about comparing brands and prices when shopping can help your kids develop the ability to make smart purchasing decisions, which will serve them well when they enter adulthood.
9. Introduction to investments
Kids might be too young to completely grasp the idea of making money grow through investment vehicles like stocks and bonds, but a little introduction on how it works would still be a nice idea. Knowing about investing could trigger their own entrepreneurial instincts, and they could be investing their allowance on their own little business before you know it.
10. Giving back
Learning about money management is great, but you also have to teach them about the importance of giving back to the community. Explain to them how sharing helps the less fortunate, and how good they will feel when they’re doing such deeds.
There are many other money management lessons you can teach your kids, but the above suggestions are an excellent place to start. With your help, your children will grow up to be financially responsible adults. Now that’s something that you can always look forward to.
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