If you haven’t started providing your kids some basic lessons on financial literacy, you’re missing a golden opportunity. After all, kids as young as three years old can grasp basic financial concepts, so it’s never too early to start teaching the value of money. A few basic lessons in financial literacy can set your kids up for success for the future when they’re adults themselves and trying to make the most of their hard-earned money. Additionally, since most states don’t mandate any sort of financial literacy training in schools, if you don’t educate your kids about money matters, no one else will. Therefore, if you’d like to give your children a solid understanding of finances, here are some important financial lessons your kids can bring into adulthood.
The Value of Earning
One of the most important lessons you can teach children from an early age is how work is tied to earning money. Your kids should learn early to associate how the work they’re responsible for performing is directly tied to money they earn. As soon as you believe your children can do work around your home, you should provide them a weekly allowance. When they become teenagers, encourage them to find part-time jobs that they can balance between schoolwork and other activities. Doing paid work during the formative parts of their childhood will teach them to consider the value of their time working, and encourage them to find ways to increase it.
The Power of Saving
Earning an allowance or a paycheck from part-time work is no good if your kids just go out and spend all their money. Instead, you should encourage them to save a substantial portion of the money they earn. Even when they’re only receiving a small allowance, you should mandate that they save some of what they receive. A piggy bank can be an excellent savings starter when your kids are young; feeling the bank get heavier as it fills up can be exciting. Once your children get a little older, you should help them open a savings account. These days, the budgeting apps at most banks make it easy for kids to check their balances and deposit funds. A savings account will also help your kids learn about earning interest on their saved money, which is a great insight to appreciate at an early age.
The Need to Budget
Teaching children about budgeting is a critical financial lesson they can bring with them into adulthood. Less than half of Americans currently have a household budget, so this is clearly a lesson our parents didn’t take the time to teach us! Along with the mandatory savings you’re having them start, you should also help your children learn how to categorize their spending, and have them make a plan for how they’re going to allocate the rest of the money they earn through their allowance or part-time job. Have your kids put their budget in writing or on a computer, and then help them track it each month to see how well they followed it. Instilling good budgeting habits in your kids will be invaluable when they’re older and need a solid budget to help balance more complicated financial inflows and outflows.
A great lesson for your kids to carry into adulthood is how to get the most out of their money when they spend it. Teach them how to be wise shoppers, so they get the best deals they can. Show them how to compare prices and features on similar items, so they obtain the optimal value from whatever they finally decide to purchase. Strategic patience when it comes to shopping is a great value to instill in your children from a young age, too; learning how to avoid impulse purchases and instead be a discerning shopper will serve them well in the years ahead. Additionally, learning about discounts and savings from coupons can be helpful. Finally, helping your kids learn the difference between required and discretionary purchases–needs versus wants–is another valuable financial lesson they’ll find useful when they grow up.
Enjoy the Money You Have
While teaching your kids about the value of earning, saving, and budgeting, make sure you don’t cause them to dislike money and finances in the process. Instead, always emphasize the positive effect that earning money and allocating it wisely can have on their lives. For instance, after one of your children successfully saves up for the purchase of something important, such as a bike or electronic device, make sure to take note of the discipline and hard work that led to the purchase. You should also ensure that a portion of your child’s budget is allocated for fun activities and purchases. Learning to enjoy the money you have and using it to make your life better is a great lesson for your kids to learn early and then bring along into adulthood.
The sooner your kids learn some financial basics, the better. The tips discussed here can help your children learn about the importance of money at a young age and instill values they can carry through life. Don’t wait any longer; start teaching your kids these valuable financial lessons today.