Parenting is all about giving tips to children and watching them implement those tips. A good parent is one who awakens the inner person in the child without being invasive. Kids don’t want their privacy invaded.
Most parents, however, fail in this. They don’t consider kids as individuals. When teaching something to somebody, one needs to make sure the tutee has the ability to internalize the lessons. Kids have this ability better than adults.
Hence, don’t underestimate them, and deliver them the following money-related lessons:
In This Article
Wait before buying
One should never act impatiently in money-matters. The urge to purchase something is too tempting to resist. Parents need to teach kids why it’s important to wait.
Kids often demand their parents to buy them toys and other stuff. While some parents immediately give in to such demands, others don’t. Both are in the extremes and bad for kids. Parents should give their kids what they demand, but not immediately.
Children are intelligent. They can connect the dots and discover a causal relationship between two incidents. If parents buy kids what they want, not immediately but after a bit of delay, then kids will learn the importance of patience. Later when they’ll grow up, this will prevent them from acting hastily in financial matters.
Borrowing is a choice
And one shouldn’t borrow money from other/s unless it is absolutely necessary. I think everyone would agree that credit card debts are a headache. We have to clear all the debt in time (we can clear only the baseline amount, but experts recommend paying off the whole debt).
Getting the credit score report from three bureaus and tallying those reports to find inaccuracies in them is very annoying. Not using credit card/s may sound like an extreme statement. Limiting its use makes more sense.
Credit cards should be used only when it’s necessary. This is what parents need to teach their kids. It’s important to understand that using credit card is nothing but taking loan. Parents should encourage kids to use cash and limit using cards, so that this habit stays with them forever.
Saving can be fun
Child psychologists believe people continue to long for stuff they consider funny long after they grow up. That doesn’t mean an adult person buys toys from toy stores; that only means he nurses a subconscious desire to play.
Saving is important in life. Parents can teach saving lessons to a child through playful activities. Here’s how they can do it:
They can give the child weekly allowance with the following conditions: if he saves the money handed to him, then he’ll get a reward. If he spends the money in 3 days, then there will be no rewards. They can even buy their children a cookie jar, so that they feel motivated to save. The idea behind this cutesy game is convincing kids that saving comes with rewards. After growing up, a child realizes how true it is, but parents need to start it early.
Develop budgeting skills
Kids are unaware of how adults budget. Parents need to instill budgeting skills in them and nurture those skills. Through distributing allowance, parents can educate children about the need for budgeting and the correct ways of doing it.
They can even club it with saving. Kids can be given three options instead of one. Saving could be one of them; others could be charity and future buys. Assuming the allowance is $3, parents can insist children to invest $1 in each category.
Instead of one jar, parents can use three jars with three different labels – spend, charity and save. It’s a fun-filled game and the best part of it is kids happily interact with parents while playing it. The more interactive a kid gets, the better he absorbs the learning cues.
Tell them stories
Kids love storytelling. Parents can harness storytelling and deliver important financial lessons to kids. Instead of telling stories of fairies, they should tell kids stories of renowned financial gurus like George Soros and Warren Buffett.
In addition, parents can invent new stories so that kids learn financial planning. How about telling kids stories of the 2008 recession? Sounds like a great idea, isn’t it? The real estate sector laid off plenty of blue-collar employees. These are not stories, these were real-life incidents.
Kids don’t understand complexities. So they won’t understand the meaning of layoff. Parents can paint layoff as bad and overcoming it via financial acumen and diligence as good. Such stories will not only entertain kids but inspire them to gain financial insight.
Today’s kids will become tomorrow’s adults. Unless parents guide them and teach them the useful lessons to live a frugal life and become financially independent, they’ll face problems in later stages of their lives. The five tips, discussed here can help parents educate kids in the right way.
Author: Based in the Florida area, Tina Roth is a Finance blogger and web content strategist. She leads Personal Finance Blog, where she writes about her journey towards a frugal and debt free life. She thinks 60 words is way too few to communicate why she’s interesting. So visit the blog to reach her.
Brian is a Dad, husband, and an IT professional by trade. A Personal Finance Blogger since 2013. Who, with his family, has successfully paid off over $100K worth of consumer debt. Now that Brian is debt-free, his mission is to help his three children prepare for their financial lives and educate others to achieved financial success. Brian is involved in his local community. As a Financial Committee Chair with the Board of Education of his local school district, he has helped successfully launch a K-12 financial literacy program in a six thousand student district.
16 thoughts on “Important Money Lessons to Teach Your Kids”
Nice summary of money tips for kids. I agree with the waiting before buying one, which we’re working to implement more now. That really closely ties in with saving as well.
Almost any time we go to a store, our oldest is all about, “I want a toy, wil you buy me a toy? Do I have enough money to buy a toy?” We explain that , No we’re not going to buy him a toy, and no, you don’t need a toy just because you walked into a store – any store…
We’ve also been pointing out saving, and how if he constantly buys little things at every store, he won’t be able to have enough money for bigger, cooler things he wants. We point those out to him as well and explain he has to save his money to be able to buy something like that.
He’s only 5, but it’s amazing how quickly some of these concepts are kicking in and we’ve seen the positive feedback from them with his habits. 🙂
That’s great at 5 he’s catching on. I’m sure many of those little toys are forgotten about in a matter of days. That might be a good lesson to review with him too. Good luck!
Great lessons! In some ways, I think the kids who lived through the recent downturn as older kids/teens have an advantage, because they really got to see what happens when these lessons are not followed.
Good point Amy. My job loss last year although not fun, and I’m not suggestion anyone lose their job to tech their kids a lesson, but since it happened it was a great first hand lesson for our three children..
Story telling is a great way to teach kids about money. We tell our kids stories about our successes and our failures and keep them up to date on what we are doing financially. Since they are teens, they understand it all, but I don’t think they realize the importance of some of the stories yet.
Totally agree Amanda. We do the same. I talk to them about things they are interested in and try to include a money component into it. Ever have a teenage not want to talk about cell phones?
We are very much balancing “Beware instant gratification” with “It’s your money. You make the choice but you need to live with the choices you make.” Intellectually, my daughter knows that if she saves more she can get cooler stuff. In practice, though, she ends up spending money on things like jello molds at the grocery store, even though I remind her that if she saves her money all week she gets a $1.50 more than if she spends any (that’s our simple interest system.)
I’m sure over time these lessons will sink in. It great she’s involved, makes choices with her money at her age.
Waiting before buying and story telling I think are the two advices that sticks with me. When I was a kid, every time I saw the shiniest packaging for the next Yu-Gi-Oh card, all reason went out the window and I just “had to have” it. I think I would have made different choices if I was the one paying in the register with my hard-earned money because I would have skin in the game, but it was so hard to resist that impulse!
LOL. We have some Yu-Gi-Oh cards around our house too, but more Pokemon these days. Agreed parting with your own cash is a great lesson.
Love this post, Brian! Such important lessons to impart.
“Borrowing is a choice.” This is my absolute favorite. Much of society has conditioned itself to say “I HAVE to have a new…..iPhone, car, pair of $300 shoes, etc.” We talk a lot about needs vs. wants in our family and about not purchasing when you don’t have the cash.
Thanks Laurie. I agree. I hear so many people concerned about their credit score and remind them it’s only needed if you are looking to borrow money. The goal should be not to do that and use cash.
It is very important to teach children about personal finances. When I was growing up, I had excellent role models of frugality in my parents, but they never talked about financial management. It was like it was a dirty topic. Some people seem to absorb lessons through osmosis, but I didn’t – at least not about frugality from my parents. My own children are probably learning more than they care to : ) We’re changing our financial reality for the better, but I don’t want to count on our kids learning from it through osmosis.
I’m sure your kids are thankful for the lessons. 🙂 I would not want to leave it up to osmosis either. Leading by example is great, but explaining the “why” behind it is even better.
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