Parents have to keep many financial balls in the air at the same time as they juggle income and expenses to make ends meet. The rising costs of living, inflation, and the fact that wages are not rising quite as fast might make the financial future look particularly gloomy. Interestingly, if you are struggling with debt, you’ll want to do everything within your power to ensure that your kids have a better financial future.
One of the smartest ways to ensure the financial prosperity of the next generation is to teach your kids about money. This article provides insight into five valuable money lessons you should teach your kids.
Teach them how to save
It is important to start teaching kids the importance of savings from elementary or kindergarten age. Piggy banks or clear jars are simple effective and inexpensive ways to teach them how to save money. You can walk and talk them through the process of saving money by showing them how that the ‘wealth’ in the jar is increasing. When they save one dollar up from dimes, make a big fuss about and they’ll be eager to save up five dollars. You should also ensure that you are setting good financial examples for your kids to emulate. I can’t overstress the importance of avoiding money arguments in front of the kids.
Teach the value of money
Today’s money is worth practically nothing on its own – nobody eats the paper on which money is printed. Money gets its importance from the value that it carries in its ability to buy stuff. Hence, you need to teach your kids the importance of money by letting them know that buying stuff usually costs money. If you go into a store and they fall in love with a Captain America miniature, tell them that how much its costs and let them do the actual transaction in exchanging the money for the toy.
Teach opportunity costs and delayed gratification
One of the main reasons many adults struggle financially is because they don’t understand opportunity costs and they are not disciplined enough to pursue delayed gratification. As your kids grow into tweens, you should start teaching them about opportunity costs. Opportunity cost is the best way to teach younger folks that human wants are unlimited but the resources available to meet those needs are limited. Hence, if they want to buy a new video game and a new baseball kit, you can tell them to choose one over the other so that they can understand that financial decisions often have consequences.
Teach them the power of earnings
There’s possibly no greater financial lesson that you can teach kids by making them understand the importance of earning money. It is good to provide for your kids, but above the tween age, you should let them know that nothing in life is free. Hence, you might want to start by giving them commissions in addition to their allowances. Maybe they’ll take out the trash or mow the lawn for an extra couple of dollars each week. Teaching kids how to earn money is a valuable skill that helps them to understand that the world doesn’t owe them a dime and that they need to be hardworking to earn their keep.
Once your kids grow into teenage, help them find appropriate jobs. Winter, Summer, Spring, and Fall, breaks are perfect opportunities to put their free time to good use. Helping them find a job will also ease the stress on your wallet and you have fewer reasons to fear that an idle hand is the devil’s workshop.
Let them learn how to give
Above all, a valuable financial lesson that you can teach your kids is to learn how to give. Depending on your beliefs, you may want to encourage them to give a part of their earnings to support religious organizations. They can also give to charity or people you know could really use the help (financial or otherwise). Teaching kids to give helps them grow into selfless adults down the road.
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