Money management is a skill that, if mastered, can give your child a great head start in life. As parents, you are in a unique place to set their financial future on the right path. Here are a few things to help teach them as you figure out good financial skills together like staying debt free and saving up.
Money Management: Tips for Teaching Kids Good Financial Skills
Needs and Wants
How often do you hear your child say things like “I need a new DS”, or “I need a corn dog right now”? Kids are hard wired to think everything they desire is a need. Teach them that a need is something essential for survival, and a want is something you can go with or without. Help them identify when they truly require new items, and which one are more frivolous expenses.
Delayed gratification is not something we are encouraged to live by. Our whole society is based on making us think we need something and need it now. Teach kids to wait for the good things they want, instead of dragging themselves down in debt for something they won’t even want once it’s finally paid for. Help them realize what kinds of expenses are worth waiting for.
The Value of Saving
If there was only one thing you could teach kids to get them on good financial footing later in life, it would be learning to save. Seems like if you give them a dollar they want to spend it right away. Help them learn the lesson of saving by having them accumulate more money to get a more expensive toy. This way they can see how waiting and saving can really pay off.
You might also take them through the family budget. This way they can see where the money goes each month and why you might not be able to afford everything they want. Use a mortgage calculator to show them the best mortgage rates in Houston and how long paying one off can take. When they see how big expenses are expected to be paid they might also come to a better understanding about the importance of saving.
The Value of Work
Gone are the days of hard work that led to an allowance, nowadays kids expect to get paid at the end of the week whether they did anything to contribute to the family or not. This makes it so important to teach them differently. The only way they will grow up understanding that life will not just get handed to them, is to teach them value of working for what they get. Teach them to earn their money. Give chores that help the family and household and reward them at the end of the week if they achieved their goals. Withhold their pay if they didn’t. With time they will learn you only get what you work for.
Importance of Giving
Kids need to understand that the world is bigger than their little circle. Show them the world, and the need and teach them how good it feels to help other people. Sometimes generosity is a principle many of us skip. Help kids stay frugal with their financial skills, but not miserly. Sharing is also important.
There are many ways we can give our kids a leg up in the world, but teaching them good money skills is one of the best. It’s our duty to our children to give them every advantage we can. The world turns for money, so make sure your kids are prepared and have good financial skills and sense for their future.