Since our schools don’t teach our kids about money, it falls upon parents’ shoulders to ensure their children are financially literate. That is why it is so important to teach these essential money lessons to your kids.
Contrary to what some parents might think, it’s never too early to begin money lessons for kids. The earlier you teach kids financial literacy, the better it will be for them when they grow up. If you expect them to live independent lives on their own.
Let’s take a look at seven money lessons that you must teach your kids.
1. How Money Works
It is but natural for very young kids to assume that their food, clothes, or school supplies just appear out of nowhere.
By teaching them the concept of money and how you have to earn it to buy them what they need, your kids will have a much better idea of how money works and learn not to take it for granted.
2. The Importance of Saving Money
Saving money allows us to feel greater security in life, as we have a fallback should anything unexpected occur. Savings also give us a chance to make bigger purchases in the future.
Teach your kids about what saving money can do for them, and it will inspire them to save any allowance they earn through chores for future use.
3. Budget Lessons
Kids need to learn how to create and stick to a budget once they start earning money through chores or odd jobs around the neighborhood.
With budgeting knowledge, your kids should be able to plan their spending and not blow all their money in one go.
4. The Concept of Delayed Gratification
Kids being kids, they naturally would want to get whatever they desire right away.
Since things don’t work that way in real life, it would be great to introduce the concept of delayed gratification to them.
That way, they’d learn that they would have to wait to get what they want. They’d learn to be patient and obtain the ability to resist an immediately available reward in favor of a bigger and long-term gain in the future.
4. What Credit Is About
The world runs on credit, and it’s a concept that your kids must learn while they’re still young, especially if they see you make purchases with a credit card. You can help them learn to buy wisely by giving them a kids debit card.
Teach your kids that you’re borrowing money from a bank whenever you make a purchase using a credit card and that you’re obligated to pay it back as soon as possible.
It would also be great if your kids learn about credit limits, credit scores, and the consequences of missing payments or paying the minimum, among other things.
5. Comparison shopping
If your kids like to tag along when you go grocery shopping, then you have an opportunity to make such trips an educational experience.
For example, you can bring your kids to the breakfast cereal section and have them compare brands and their prices, nutritional value, and other factors before they make a choice.
By teaching them comparison shopping, your kids will learn how to make the best shopping decisions.
6. Investing
You don’t have to teach kids the intricacies of investment vehicles until they are in thier teens but investing is certainly an essential money lesson for kids. All they need to know for now is the concept that we can all grow our money by investing in stocks, bonds, and other investment vehicles when the time comes.
For your children who already have a little understanding of investment, you can help them learn investing skills by giving them their own brokerage account which provides them an investing platform where they can research, buy, and monitor stocks and funds.
7. The Importance of Giving
Financial literacy isn’t all about earning, saving, and spending money. Giving to the less fortunate should also be an integral part of the money lessons you provide your children.
Your kids will be eager to learn about charities and how they can help their beneficiaries with the money they earn through chores and odd jobs.
It’s also vital that they learn that their time is just as valuable, and they can give some of it to help charitable causes that interest them.
These are just some of the many money lessons you need to teach your children while they’re still young, but they’re an excellent place to get started.
With the money lessons they’ll receive from you, you would be helping them build a solid financial foundation for their future.
You might also like:
- Money-Saving Tips for New or Expecting Parents
- Expenses to Prepare for Before Having Children
- How to Teach Your Children Sound Financial Principles
About the Author:
Samantha Green is the Content Marketing Strategist for the MCA award-winning app, BusyKid, the first and only chore and allowance platform where kids can earn, save, share, spend, and invest their allowance. A mom of two, she enjoys spending time with her kids and reading books to them.
