How to Teach Your Children About Money

Money. It’s a subject that even most adults struggle with. Still, it is something that we must talk to our children about. Why? So they can avoid the mistakes we committed in the hopes that they won’t have the same financial struggles that we dealt with.

As parents, it is our responsibility to make sure that our kids are on the right financial path. That said, here are the things that you should teach your children about money:

Appreciation is Everything

As our children get older, they have to realize that the only way that they will ever feel financially secure is when they appreciate what they have. It’s human nature for people to compare what they have to what others have: children commonly compare what they have with what their friends or cousins have. Yet, you must find a way to instill a sense of appreciation for what they have. Once they have this value within their system, it will be easier for them to make healthy financial decisions later on.

Open a Bank Account

As soon as your children start having their own money, you should encourage them to open a bank account and do careful monitoring of their cash flow. This way, they have an idea of how much they are worth, allowing them to understand what they can and cannot afford.

Saving for College

They can use the bank account they opened to save up for college. While they may end up with the cheapest loans possible, do not encourage it. Do not let your child fall into the trap of relying on loans to help them get by unless they can’t do it any other way. Teach them not to take out loans from friends and relatives either. Instead, let them take on summer jobs and set aside most of that money for their college fund. This way, they can focus on getting their degree, knowing that they contributed to funding for their education.

Limit Credit Card Use

Credit cards have benefits but as much as possible teach your children to steer clear of credit cards other than to teach them how to use them responsibly. Introduce them to the concept of bad debt and why they should stay away from it. It would also be best if you can present them with other options to help them survive without the use of credit cards.

Allow Them to Budget

Sometimes the best way to teach money management is by giving actual money. If you can, provide your kids with a budget that they can work with every week. Let them know that if they want to buy anything, they have to take it out of their budget. If your child is a teen, you can make them responsible for paying their phone bills.

Introduce the Concept of Investing

Sometimes parents get the idea that their child is too young to learn important life skills. It is a common mistake that comes with a consequence, such as raising an incompetent child. As soon as your child can understand the concept of mathematics, you can introduce investments to them. One of the easiest things to teach is compound interest, and you can add to the lessons as your child’s interest increases (pun intended).

Teach Them to Make Money

One of the best ways of teaching your child about money matters is by encouraging them to find ideas on how to make money. Encourage them to look for part-time jobs or even go into entrepreneurship. Do they want to sell lemonade? Encourage them, as this will help them gain entrepreneurial acumen early on.

The discussion of money matters should begin at home. If you want your children to have a better sense of handling and making money, you should teach them as soon as they have money of their own. This way, you create the best future for them.

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