Most Important Money Management Lessons for Kids

Teaching Your Children to Be Responsible with Finances

Raising a child is a demanding endeavor. Imbuing the right core values takes diligence and patience. However, if you get the education right, you may set your children up to achieve their dream life. Money management is one of the crucial skills, and we will tell you how to teach kids about it.

Every parent wants only the best for their kids. For different people, this may have different connotations. However, learning emotional intelligence, love, and being smart about finances are some values that most will agree are essential to becoming a fulfilled human being. Any way you spin it, money is an incredibly important part of our society. One can’t get away from the fact that it governs the vast majority of our daily transactions, and it is involved in our hopes and dreams. Be it education, health, entertainment, basic survival, you name it – finances can’t be taken out of the equation. Learning how to be smart with one’s money can be the deciding factor whether your child succeeds in life, or doesn’t. That is especially true in a society that pushes consumerism, short-term pleasures, and so on. If your kid makes it to an american express, you want them to invest wisely, not spend at first instinct. Money management is important, and we are here to cover what you should teach your kid.

How to Learn Money Management – For Kids

Instill a Saving Habit

The first interactions your kid will have with income will likely be pocket money and gifts. Children are easily targeted by various advertisements, as well as influenced by what friends possess. Flashy toy and candy ads are engineered to capture attention vehemently. Naturally, kids will want to splurge whatever money they get. It is an excellent skill to teach your kid that money is not necessarily just for spending right away, but it can be saved. Saving teaches a child to be disciplined, goal-oriented, and willful to understand what delayed gratification is. It is hard to get a child to understand that saving for the future is worthwhile. However, saving for a wanted toy is a different story. To encourage your kid to learn the skill of putting some cash away, consider matching their savings dollar for dollar, or at least by a percentage. Also, give them a cute saving jar to instill some fun into the process.

Allow Them to Earn Money

To become truly responsible with money, kids need to learn to spend their own. An allowance can accomplish that. It gives your kid some skin in the game, so to say. However, it is much better if an allowance gets earned. You could establish that by having them do simple chores to understand the concept of earning their money with work. Money management is a skill, and it is learned through practice. Everyone knows that earned money is valued a whole lot differently than cash one comes across or is gifted. It is probably the most important concept to teach your children. Once the money is truly valued, then wasting is no longer an option.

Teach Kids About Investing

The old saying that money doesn’t grow on trees is not exactly true. One can make money work for you if invested properly. Saving income is great, but applying the savings intelligently is also vital. The concept of investing does not need to be taught at a super early age, and different kids will be ready for it at different times. It could be fourteen, it could be eighteen. However, once they are interested in the concept, you could open a savings account and a stock portfolio for them to let them explore it first-hand. Surely, do that with your financial advice on the side. Learning about stocks and companies can be made more appealing if you talk to your children in their language. Depending on their interests, use gaming franchises or clothing brands to present them with real-world evidence, and how the legacy of companies can get used for one’s financial benefit.

Help Them Understand Comparison Shopping

Comparing prices and making smart buying choices is what effective money management is all about. That is a skill that kids can get in on as early as in elementary school. The simplest way to help your kid learn about comparison shopping is to take them on a grocery trip with you. Have a list of products you need, and then explain how different shops have different prices, deals, and so on. The concept that simply browsing around you can save a lot of cash is also applicable in online shopping. Merely opening up a price checker website on a specific toy your kid fancies can get the message across quite effectively. Once you tell them that with adequate price hunting one can get two favorite toys instead of one at a raised price, comparison shopping should soon become a new favorite venture.

Conclusion

All in all, teaching kids about finances is a fundamental thing to do. Some would say that having a good understanding of handling finances is more of a cultivated value, which is not a money management skill, but something deeper. Instilling the right lessons will set up an intellectual framework that they will carry with them for life. Most importantly, teaching children about finances does not necessarily have to be boring. Incorporate concepts, products, and companies that your kids love. Simply apply basic teachings to their favorite products, and show how actions such as price comparing, saving, and working can benefit them to have more of those. What are money management tools you want your kids to understand? How do you go about teaching them financial know-how? Please leave your comments in the section below, we would love to read your opinions!

Also read: How To Encourage Kids and Teens to Become Money Savvy?

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About the author: William Benetton is a famous writer, professional photographer and web-designer. Last few months he has been creating interesting, informative blogs and websites. If you want to contact William, please check his Facebook. He can’t imagine his life without sport, travel and morning coffee.

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