Are you regularly teaching your kids about money and how to handle it? I don’t mean just talking about very simple concepts such as “save money” or “don’t spend it all”. I mean are you really teaching them what money is all about?
When they get older are they going to have a clear picture of how to manage their money well so they don’t end up in financial trouble like so many people who never learn these principles?
The Basics Still Apply
Managing money is much more difficult than it was 40-50 years ago because most of us have multiple debts such as car loans, home equity loans, credit cards, a mortgage, etc. Decades ago, most people didn’t have that kind of debt.
But complicated or not, the basics still apply, and if you start teaching your kids how to manage money like their great grandparents did, they’ll be much more likely to be financially secure during their adult years.
5 Things You Should Be Teaching Your Kids About Money
Of course what you teach your child should always be age appropriate. But here are some general concepts for teaching kids about money that will always keep them on the right track:
- It Takes Work to Make Money- Teach your kids that money doesn’t originate from mom and dad. Show them that money is the result of doing good work and meeting expectations. When they start realizing that money doesn’t appear out of nowhere, then you’re teaching them how the real world works. Then they can eventually support themselves because they know how to work hard and meet expectations without feeling entitled (and they won’t be living in your basement!).
- Teach Them to Budget- As your child gets older (9-10 years old), start teaching them to have a plan for their money. When they earn money, teach them to write down a simple plan that includes how much they will save, give, and a list of what they plan to spend their money on. Learning to put together a budget, no matter how simple it is, teaches your child to plan spending in advance instead of allowing the money slip through their little fingers, wondering where it all went. Unfortunately, most parents need to learn this one too.
- Teach Them to Stay Out of Debt- When you borrow money you lose, period. Borrowing will always cost more than using cash. When you teach kids that car payments, credit cards, and consumer debt are things they should stay away from when they become adults, you’re setting them up for long term success. I never lend money to my kids. They finally stopped asking.
- Teach Them About Saving- Kids should learn the habit of saving part of every dollar that passes through their hands. I recommend at least 15%. This will get them in the habit of not spending everything they get, which is a habit we should all try to develop.
- Teach Them About Giving- Giving is very important habit to learn because it helps eliminate selfishness. When your child is able to give away a portion of something she’s earned, it empowers her and helps develop a healthy perspective about money that says “it’s not all about me”. Your child will be able to use the resources she has to develop her own spirit while doing something to make the world a better place. I recommend at least tithing 10% on every earned dollar as a standard.
Teaching Your Kids Pays Off
When you teach your kids to manage money wisely it always pays off bigtime when they get to adulthood. Learning good habits early always has a lasting effect.
But remember, if you’re a parent and you’re not using these principles to manage your own money, you’ll probably have a tough time teaching your kids to manage their money with these concepts as well.
The best way to lead is to lead by example. Like it or not, your kids are always watching to see if what you say matches up with what you do.
So be an awesome leader, teach your kids these lessons, and they will succeed with money and in life!