Lessons about Money Your Kids Need to Learn
If you aren’t going to teach your kids about money, who will? Do you think their teachers have a unit on how to balance a budget or borrow money? Think again! While your children will learn a lot in school, personal finances rarely make it into the classroom.
By focusing on calculus over credit, public school doesn’t prepare your kids for running their own household.
It doesn’t matter how far off that day may be, don’t wait until it’s too late. Give your children a helping hand when it comes to their finances. Set aside some time to teach them important financial terms that will help them later in life.
Here are some lessons about money you should teach your kids today.
Money Doesn’t Grow on Trees
This one is for the youngest in your family. While they may be familiar with the cash in your wallet — or, more likely, the magical card that you swipe to get candy — they may not understand what you do to get this stuff.
Talk to them about how you and/or your partner go to work to earn money. More importantly, make them understand that if you don’t work, you don’t get paid.
This is a great lesson to hand out if you’re thinking about giving them an allowance.
The Value of Savings
Eventually, your children will be earning cash, if they haven’t already. Whether it’s from a weekly allowance, birthday presents from grandma, or a part-time job, this money is theirs to spend as they like.
Before they blow it all on candy at the convenience store, sit down and discuss the needs to budget their money.
For younger children, teach them how saving some of their money will help them purchase a more expensive toy.
For teenagers, scale this lesson to their interests. Saving may help them in the future if they plan to go to college.
You may also want to discuss how savings work in your own budget. Show them how you portion your income across bills, wants, and savings. Talk about how an emergency fund protects your family against unexpected expenses and repairs.
The Importance of Responsible Borrowing
With more mature children, you can be a little more candid about your financial situation. While savings do help cover unexpected costs, they’re not foolproof. Sometimes, you need to take out a loan or line of credit.
Talk about how personal loans work and how to find one that fits their needs. Hammer home the fact that they should only ever borrow when it’s necessary and, if it is, to make sure they can afford their repayments.
When in doubt, draw on your own experiences with borrowing money to talk about the dos and don’ts of getting a line of credit or loan. Be honest will help them understand how debt may impact their life.
Are You Ready to Talk Cash?
Don’t worry if you feel a little daunted about your task. Talking about money isn’t always easy if you don’t have a good grasp of your finances yourself.
If the idea is making your clam up, check out these resources to learn more about financial concepts. These tools will make it easier to talk frankly about money with your kids, no matter how old they are.