Seven Money Principles Every Kid Should Be Taught
Seven Money Principles Every Kid Should Be Taught
In a perfect world, every child would be given an equal opportunity to learn about finance. That advantage is one that is often overlooked in our society which is amazing given the focus on wealth that the world seems to embrace.
Despite this attention to money, it is a group of lessons that rarely get taught in the home or school. Some feel that life will teach the kids and others feel that trial and error are the best teachers.
The truth is, we are the best teachers and those lessons should come long before our kids are in debt up to their eyeballs.
Here are seven money principles or lessons that every child should be equipped with before they head out on their own:
How to Manage an Allowance
From the earliest moments, kids are going to need an allowance to understand work and earning. If you pay them in M&Ms they will at least understand the concept of earning their way and making a living.
Set up your kid with an allowance and use that to teach them all about money and earning their way in life.
How to Save Money
Part of that earning is also about saving. Show them how to put back money for emergencies, wants and various other things. Show them how to set up a percentage for each thing that is important in life and they will begin to understand the concepts of budgeting far in advance.
What it Means to be Financially Responsible
Present your child with tough choices where money is concerned. Show them that new pair of shoes and then show them a toy they really want. Explain to them that being financially responsible sometimes means buying the things they need over the things they want. This leads us to…
The Difference Between Wants and Needs
It is alarming how many kids out there have no concept of wants and needs. Without our pointing the information out, there is no reason for them to concern themselves with such things. Take the time to show them how to tell the difference and it will stick over time.
How to Shop Smartly
Making our money stretch when times are thin is a skill and not something that will just come naturally. Teach them how to shop properly and to prepare rather than respond financially. This is a life skill that every child should know before they ever consider moving out.
What is Credit?
Kids move out these days or go to college and credit card companies instantly shower them with offers. All of these offers tend to get our kids in trouble financially before they ever get their feet underneath them.
Prepare them for such things and show them how credit works. Also make sure they understand that credit can be a bad thing too if the terms are not right or you can’t pay for something.
How to Follow A Good Example (You)
Most importantly, you need to try to model these things for your kids on a daily basis. The last thing you want is to show them one way and then to do something else. No matter what you teach them, your example will lead the way in their minds.
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