How To Start Teaching Kids About Money?
The number of families and individuals under various kinds of debts is increasing at an fast pace in this country. On top of that, the amount of debt is growing at an alarming pace with student loan debts in the US going above $ 1 trillion and credit card debt soaring past $850 billion. One should be very careful while picking up a student loan and must know the different types of Student Loans available. This emergency situation calls for desperate measures, not just to check off those debts but also to avoid them since the start. One of the effective solutions is to start teaching kids about money. The sooner they start learning the quicker they will understand how important it is to manage money.
Table of Content
- 1 Teaching Kids About Money
- 1.0.1 Money Lesson 1: Money Doesn’t Grow on Trees
- 1.0.2 Money Lesson 2: Managing their budget
- 1.0.3 Money Lesson 3: Commission instead of allowance
- 1.0.4 Money Lesson 4: Delayed Gratification
- 1.0.5 Money Lesson 5: Working (Saving) towards a Goal
- 1.0.6 Money Lesson 6: Helping them find a job
- 1.0.7 Money Lesson 7: Teaching to share
Teaching Kids About Money
Money Lesson 1: Money Doesn’t Grow on Trees
Kids do not know or realize that money is a finite resource, just like coal, petrol and water. The way they learn about the importance of saving water, the same way you need to teach them how you work hard so that they can buy their favorite toy. Explain to them that a bank is just to keep your “earned” money safe from thieves.
Money Lesson 2: Managing their budget
After explaining to them how money comes, next thing is to teach money management. And the most practical way is to give them some. If they spend all of their weekly pocket money on the first day, they would have to compromise for the rest of the week. However, you have to be strict with them, for them to realize the actual consequences of overspending.
Money Lesson 3: Commission instead of allowance
To teach them that “money is earned”, giving them money in the form of commissions can work wonders. Don’t just give them money, tell them to do chores around the house and then pay them. Small chores like mowing the lawn, cleaning their room, or taking out the trash can be a good way to start.
Money Lesson 4: Delayed Gratification
Credit cards were launched with a simple motto “buy now, pay later”. And with time this motto has become people’s mentality, resulting in huge debts. Reinforcing the idea that good things come to those who wait is important to curb this mentality in children since the start.
Money Lesson 5: Working (Saving) towards a Goal
Your son wants to buy a new Hot Wheels but there isn’t enough in his piggy bank. Why not save money till he has enough? Once he has the right amount, take him shopping and let him pay himself. This sinks the idea of working towards a goal and being rewarded in the end in his head. Securing your retirement is also crucial. Teach them to opt for a suitable plan, but only after knowing the different types of Retirement Plans available.
Money Lesson 6: Helping them find a job
During their vacations, teenagers have a lot of free time. If your teenage kid needs money, then help them find them a job. Work to make money! Inspire them to improve their knowledge about personal finance by reading the Best Personal Finance Magazines.
Teach your kids to donate a part of their pocket-money to charity. It is important for them to learn that instead of just spending unnecessarily, they can use the money to help others. Investment is a good means to earn money. Here are The 7 Best Short-Term Investment Plans For You to teach your kids about.