Why learning about money is important for kids
Money management is critical which is why learning about money is important
It is extremely important that
children learn about money because if they donít, they are apt to bankrupt mom
and dad -- and then themselves -- when theyíre out on their own. Money management is a critical life skill, which is why learning about money is important for kids. As a parent, you are
doing your children a disservice if you donít teach your children the ins and
outs of handling money.
If children are never given money to deal with they wonít
learn how to manage money. A teenager or young adult that is
clueless when it comes to money management is going to find himself in financial hot
water very quickly.
Children who are very young can play money and counting games, older children can start learning how to handle real money.
THE JOYS (SIGH!) OF BUDGETING
Children need to learn how to budget their money. Budgeting is something that parents can teach them. It's an easy concept: If you want to have money left over at the end of the month you learn to budget and cut back on spending. You canít spend more than you earn.
Budgeting is a necessary evil. A budget lets you know how you are spending your money as well as where you are frittering it away. When you write it down and keep track of your expenditures it can be a very eye-opening experience. How could I have possibly spent $200 at the fast food drive-thru this month?
Your children need to understand the concept of a budget early, and you need to set a good example and handle your money wisely. If you are spending like a harridan and creating all kinds of financial problems as a result in the household this is NOT a good example for your kids.
There are various financial software programs available that you can introduce your child to. He is probably more technologically savvy that you are and will get the hang of dealing with finances on a computer quicker than you did.
Teach your children how
to budget by having them identify how much money they have for the month from
their allowance or a job and how much of it they have been spending (probably
all of it and then some more).
Instruct your child to set goals. For example, your childís goal is to have $10 left over at the end of the month. An extended goal can be to have $10 left over each month for five months, which equals $50, which he can spend on an item of his choice.
He will learn that he
has to keep his spending not only within his monthly allowance but less than his monthly allowance in
order to have money left over to use for something he really wants to buy. He
learns, in the process, to budget and to save, which requires curtailing
spending and, often, postponing instant gratification.
Explain to your children that they must learn how to earn money. No, there isnít a money tree out back. Assign them tasks around the house
and pay them when the job is accomplished. If your child opts to spend his
earned income all at once thatís his choice, but he must realize that he has to
do another job because he earns anymore money.
Refrain from bailing out your child. Most of us are guilty of doing that but this doesnít teach them anything other than that ma and pa will come to their rescue if they get in a bind. You do not want to be bailing out your children when he is 35, although many parents are.
TALK ABOUT MONEY
Talk to your kids about money. No, you donít have to tell them that you are going straight down the tubes, but you can tell them about the economy, inflation and how it is not only wise but essential that the entire family handles its money cautiously. Tell them that water costs money, and they should be more conservative in their water usage. Tell them to turn off the lights in their room when they exit because electricity costs. Tell them to turn down the heat when they go to bed because heat costs money. Some kids arenít aware of the expenses that are involved in running a home.
EXPLAIN EARNING INTEREST
Explain to your kids how they can earn interest on their income when itís in a bank. Alternatively, you can pay them interest each month on the money they have stashed away in their piggy bank. Teach your children how to figure out interest rates.
Give them money in denominations that make saving easier. Give your child five one dollar bills instead of a five dollar bill. Tell him to save at least one dollar.
SET UP A SAVINGS ACCOUNT
Take your child to the bank and help him set up a savings account.
THEY MIGHT EVEN THANK YOU
Some day your child (the next Donald Trump?) will thank you.