What Kids Need To Know About Money
Money is something we all have to learn about at some point, even if you feel like you still don’t know anything about it! And you have to pass this knowledge down to your kids; when your child hits their teen years, this is typically when they first start learning about money.
Indeed, around this time they get their own bank account and maybe even start working for the first time. But you can do your kids a favor and teach them about money while they’re still young – spending and saving don’t have to be hard to understand! Here’s what to explain to them to help them understand how money works a little earlier in life.
That Allowances Aren’t Infinite
If your kids get an allowance, they need to understand from the beginning that the money doesn’t last forever. If they spend it, it’s gone! Even if it makes them upset and beg you for more, they can’t just have more. This can be a hard sell, but it’s a good way to teach your kids about spending and why it’s not always good to have something right now!
That Saving is Important
Saving is a very good habit to have at any age, but when you’re a child it can be a totally foreign concept. After all, the money just comes from mummy and daddy! But if you show your child that saving is something you have to do, through talking to them about how you spend your money, you can instill this value from a young age. For example, if you take out final expense insurance before your kids hit the teen years, you can explain why decisions like these are important. Indeed, that the future is something to look forward to but also something to very carefully plan for.
That Some Purchases are Better Than Others
This is the simple case of what vs need. If they want two things, but they can only afford to have one, they need to assign priority to one thing over the other. But if they want something but actually need something else, it’s best to spend on what they need. Some new clothes, for example, are an example of a need, whereas a new toy is something they only want. And it’s easy to demonstrate this difference; remind them that they’ll have nothing to wear, and what a disaster that would be!
That Their Money is Really Theirs
You can help develop lifelong financial boundaries here. If they’ve earned some money, it’s theirs. If they’ve been given money in a birthday card, it’s theirs. And if they’ve saved up and put it all in a jar, it’s theirs! And once money is theirs, they can do what they want with it, and it can’t be taken anyway.
Teaching your kids about money can seem like a big, complicated thing. But in reality, you’ve just got to break things down into more simple parts like those above.