If I had a dollar for every time a parent asked me what to tell your kids about money, I'd be a millionaire. There are many different aspects of money management that you can and should tell your children about. Here I will share with you the seven most important principles
i . Money can be exchanged for goods or services.
This is one of the first lessons you should teach your child once they are old enough to understand – usually around 3 years old. The next time you go down to the corner store to buy an item or two, have your child hand the money to the cashier. The more they appreciate the concept of being able to exchange money for things you want or need.
ii . One should be careful with money.
Some people I know seem to think that any coins under 50 cents are too small to bother with, so they simply toss those smaller coins in the bin when cleaning out their change from home. What a shame! Encourage your child to be careful with all denominations of money and show them how these small coins can add up by starting a family coin box. Maybe you could use the money to fund small family outings (a trip to the store for ice cream).
iii . Money must be earned.
There are many people in the world today who never seem to have learned this lesson. They sit at home and wait for handouts to live, or turn to a life of crime to finance their existence. Be careful not to give your child money every time he asks for it without expecting something in return, such as completing chores.
iv . Encourage one-third savings, one-third donations, one-third spending.
The exact proportions in which your child will split their money is up to each individual family to decide based on their beliefs and the child's needs. This is fairly easily achieved by providing them with 3 piggy banks or piggy banks - one for spending, one for saving and one for giving.
v . Avoid borrowing money whenever possible.
It is always much more difficult to repay borrowed money than to save your money. However, some loans, such as home loans, tend to be unavoidable. A good rule of thumb is if you can't afford it, you can't afford it!
vi . Money is not your best friend, don't let it control you.
Simply, try not to be so preoccupied with your finances that you are forced to work 60-70 hours a week to maintain your lifestyle. If you do, you're letting money rule your life. You usually don't need a fancy car (and a car loan) or a foreign vacation (and a personal loan). All these things are nice, but only if you can easily afford them!
vii . Show them how to budget and live within their means
This is one of the most important skills your child needs to know and so many people don't seem to know how to do it. Recent surveys have shown that many people spend 10% to 20% above what they earn. They make enough money to fund their lifestyle, but they just don't count it, so they spend a lot of money every week.
These seven lessons are off to a great start, but there are many more money skills that your child will benefit from immensely. To learn more, visit the Kids Money Tips website.
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