If you’re like most parents, you want your kids to be successful in life. But success doesn’t come easy – it takes hard work and smart decisions. That’s why it’s important to start teaching your kids about money early on.
Young adults often enter adulthood without being taught some of the important financial lessons listed below. Balancing financial commitments, added expenses of adult life and mortgages etc can lead many young adults searching; what is an IVA? How will debt relief help? and more.
Here are 10 top financial lessons you should teach your kids now.
1. Talk about money early and often
It’s never too early to start talking about money with your kids. By having regular conversations about money, you can help them develop a healthy relationship with it. Explain what money is and how it is used. Teach them the basics of budgeting, saving and spending. And as they get older, you can share more complicated concepts like investment and credit.
2. Give them an allowance
One of the best ways to teach kids about money is to give them an allowance. This will give them some “skin in the game” and help them understand how to budget and make choices about spending. When giving an allowance, make sure it is age-appropriate and tied to completing certain tasks or chores.
3. Help them set financial goals
Goal setting is a important skill for kids to learn. And it’s especially relevant when it comes to money. Sit down with your kids and help them set some financial goals. This could be saving up for a toy they want or putting away money for their future education. By setting goals, kids will learn how to delay gratification and save up for what they really want.
4. Teach them about needs vs. wants
One of the most important lessons you can teach your kids about money is the difference between needs and wants. Help them understand that they need food, shelter and clothing, but they may want a new toy or video game. This will help them make better spending decisions and avoid impulse buys.
5. Encourage them to save
Saving is an important financial habit to instill in kids. Encourage them to put away a portion of their allowance or earnings from odd jobs. Once they have saved up enough, help them open a bank account so they can start earning interest on their money.
6. Help them make wise purchases
Teach your kids how to comparison shop and look for sales and discounts. This will help them get the most value for their money. And when they are ready to make a major purchase, such as a car or computer, help them research different options and make a wise decision.
7. Introduce them to credit
Credit can be a complicated topic, but it’s important for kids to understand the basics. Explain how credit cards work and the importance of paying off the balance each month. You can also teach them about interest rates and how they can impact the cost of a purchase.
8. Help them start earning money
One great way for kids to learn about money is to earn it themselves. Help them find odd jobs around the neighborhood or set up a lemonade stand. They can also do chores around the house to earn an allowance. As they start earning money, they will better understand the value of it and how to make wise decisions about spending.
9. Teach them about philanthropy
Giving back is an important lesson for kids to learn. Talk to them about different causes they can support and encourage them to donate a portion of their allowance or earnings to charity. This will help them develop a giving spirit and understand the importance of helping others.
10. Be a good role model
Finally, remember that kids learn by example. So if you want them to develop healthy financial habits, you need to be a good role model. Show them how to budget, save and make wise spending decisions. And as they get older, involve them in your own financial planning so they can see how you are preparing for the future.
By following these tips, you can teach your kids about money and help them develop healthy financial habits that will last a lifetime.