If I had a dollar every time a parent asked me what I should tell my children about money, I would be a millionaire. There are many different types of money management that you can and should tell your children about. Here I will share with you what I believe are the seven most important principles
1. Money can be exchanged for goods or services.
This is one of the first lessons you should teach your child when he or she is old enough to understand them - they are usually about 3 years old. The next time you go down to the corner shop to buy one or two items, let your child give the cashier some money. By doing so, they will gain a great deal of appreciation for the idea of being able to exchange money for the things they want or need.
2. One has to be careful about money.
Some people I know, seem to think that any coins worth less than 50 cents are too small to worry about, so when you clean their messy change in the house, they just throw the little coins in the trash. What a waste! Encourage your child to be careful with all the coins, and show him how those small coins can fit together, by starting a small family coin box. Maybe you can use the money to pay for a small family trip (a trip to the store to get ice cream).
3. Money must be made.
There are many people in the world these days who seem to have never learned this lesson. They stay at home waiting to be offered to survive or turn to a life of crime to support their existence. Be careful not to give your child money every time he or she asks for it, without expecting anything in return for completing household chores.
4. Encourage one-third savings, one-third contributions, one-third spending.
The exact amount of money your child is allocating money depends on each family to decide for themselves, based on their beliefs and the needs of the child. This can easily be achieved by giving them 3 pig banks or cash boxes - one for spending, one for saving, and one for donating.
5. Avoid borrowing money where possible.
It is often more difficult to repay a loan than to save your money. Some loans, such as mortgages, are often unavoidable. A good rule of thumb is that if you do not have the money to buy it, you cannot afford it!
6. Money is not your best friend so do not let it control your life.
Simply put, try not to be overly concerned about your finances, until you are forced to work 60 to 70 hours a week to get on with your life. When you do that, it means you are letting money control your life. You usually do not need a luxury car (with a car loan) or an overseas vacation (as well as a personal loan). All of these things are great, but only if you can afford them easily!
7. Show them how to make money and live within their means
This is one of the most important skills your child should know, which most people do not seem to be able to do. A recent survey has shown that most people spend 10% to 20% more on what they earn. They earn enough money to support their lifestyle, but they do not budget, so they spend a lot of money each week.
With these seven lessons under their belt, they will have a good start, but there are many financial skills your child will benefit most from learning. To learn more, visit the Kids Money Tips website.
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