When it comes to money matters, it is best to get your kids started early. The younger they know the value of money, the better their chances of becoming financially wise when they grow up.
Very seldom do educational institutions teach kids about money management that they learn about it too late in life unless taught by their parents. For this reason, parents should take it upon themselves to equip their children with knowledge about this so that their children can build the right money habits as they grow.
Lesson #1: There is a difference between needs and wants.
One of the first things to having financial discipline is to learn the difference between what needs and wants are. While this is also taught in schools, parents should also reinforce this at home. You can give them concrete examples of needs and carefully explain that they are necessary for our existence.
This can be further emphasized by taking a trip to the mall and playing a game to identify which items are wants and which ones are needs.
Lesson #2: Spend your money wisely and use it on important things.
After teaching kids about the differences between needs and wants, you can now delve into their decision-making. As long as you’ve already established what the needs are, you can now take the chance to teach them about prioritizing things, including things that fall outside the needs category.
Not all wants are a waste of money. In fact, some of them are valid and legitimate that they somehow, eventually, become essential items such as computers and accessories, some skincare products, health supplements, and other things that have become vital to make us fully functional individuals.
Lesson #3: A penny saved is a penny earned.
Children should be taught the value of saving for a rainy day and not waste money, especially if they don’t have money to burn. Teaching kids how to prioritize their spending helps them set aside money to add to their savings.
For instance, you can show them how to make better decisions when it comes to purchases. Teach them the art of comparing prices for the best deals. Like if you’re looking for the best deals on pea gravel for your house, or you can even talk about looking for a shop where they can get the toys they want at a lower price. Every time they get to save on their purchases, they instantly earn money to add to their savings.
Lesson #4: You need to work hard to have money.
One of the most crucial things kids need to know about money at a young age is that money doesn’t grow on trees. People work hard to earn money. Parents spend long hours (some even years) apart from their families to provide well for their needs.
Children need to understand that certain sacrifices need to be made to enjoy the perks of having money, including the toughest work.
Lesson #5: Good things come to those who wait.
Children aren’t exactly the most patient creatures on the planet. This is why parents correct them and teach them whenever the opportunity presents itself. It is an essential skill that will serve them very well in life, regardless if they deal with people, circumstances, and money.
We’ve all seen how kids throw tantrums in toy stores because they couldn’t get what they want at the time that they want it. Teaching them the value of delayed gratification can help build patience in them, especially when they find that the rewards of patience are well worth it.
Of course, for children to fully grasp this concept, it has to be applied practically. You can’t just preach at them. The lesson has to be real and tangible to them, such as rewarding their good behavior with the toy they want plus an ice cream date with you.
Feel free to be creative as long as you drive home the point that good things come to those who wait.
Lesson #6: Return what you borrow and only borrow what you can return.
This lesson applies not just to toys and playthings, but it needs to be carried on to other areas of life as well, especially money. Never allow children to get into the habit of borrowing things without returning them. They should always give back what was lent to them. If they grow up with this nasty habit, they will end up with many enemies in life when they start borrowing money.
Well, ideally, they work hard and get a well-paying job and live below their means so that the need to borrow money is eliminated. But in case they need to seek financial help, they must always give back what they borrowed. And they should have the common sense and self-control only to borrow what they can afford to pay back.
Money management will play a major role in our children’s lives. The sooner we teach them about it, the sooner we prepare them and set them up for a future where they can be financially secure.