Do you want to teach your kids about money? Sometimes it takes an actual “money” lesson to stress the way money really works. Helping your kids succeed financially in life, starts by teaching kids about money early. Here are six important money lessons you may want to start teaching your children today.
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#1. Purchasing Items
If a child never has a chance to purchase something with their own money, they won’t understand the concept of it. Whether it’s a onetime lesson with your money or when they earn their own money and purchase something, you don’t want to miss out on this vital money lesson.
#2. Saving for a Rainy Day
Children will most likely learn the important money lesson of saving by watching you. When you want something, save up for it instead of pulling out the credit card. Children need to understand the instant gratification isn’t always possible and saving up money will help the purchase be even more valuable.
#3. Spend, Share, & Save
After a child receives money, whether from a birthday party or from doing chores around the home, they should learn about spending, sharing, and saving. This concept is very much associated with real life. Children get to understand that all money doesn’t get to go to fun. The reality of life is that children will most likely want to give to charity, spend some of their money, and of course save some of it. You can actually buy a piggy bank that helps the child keep the money in one spot, while still splitting it up appropriately.
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#4. Cost of Things
Sometimes children don’t understand how much something actually costs. For example, the cost of college doesn’t really hit a person until later in life because students take out loans to help cover it. Talk to your child about how much college is and what it takes to pay for it. Help them understand the value of grants and scholarships compared to taking out a loan. You can do this at any age. If your child wants a bicycle, take them to see the bicycle, what it costs, and how long it would take to save up for something like this. If they are alright with working to save up the money to pay for it, then your child has learned a very valuable lesson at a young age.
#5. Have the Credit Talk
Many kids don’t actually know what “credit” is. All they know is that sometimes their parents use it. You can teach your child an important money lesson by talking to them about credit. They should know that credit is important in life, but what is more important is how you use it. Talking to them about credit cards and how they should be paid off ASAP, or better yet teach them how cash is a much better alternative.
#6. How to Budget
Most adults aren’t even sure of how to budget. Sitting down with your child and showing them the basics behind budgeting is important. For example—you have $10 of allowance coming in this week.
Fun -$2
Saving- $2
Giving-$2
Your child gets to decide where the rest of the $10 goes. You can talk about how using leftover money from that $10 to start a savings fun for something like Christmas presents is also wise. You know your child best and what they can understand. It’s your job to be able to convey these difficult principles to a child that’s young or old.
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If you’re up for the challenge, you’ll be glad you took the time out of your life to teach your child these 6 important money lessons (no matter what age).