To Tell Your Kids About Money
The 7 Essential Lessons
If I had a dollar
for every time I have been asked by a parent what to tell
your kids about money, Id be a millionaire. There
are many different aspects of money management you can
& should tell your children about. Here I will share
with you what I believe are seven of the most important
1. Money can be exchanged for goods or services.
This is one of the first few lessons you should teach
your child once they are old enough to understand
usually around the age of 3 years. Next time you go down
to the corner store to buy one or two items, let your
child hand the money to the cashier. By doing so, they
will gain a greater appreciation of the concept of being
able to exchange money for things you want or need.
2. One should be careful with money.
Some people I know, seem to think that any coins with a
value under 50 cents are just too small to be bothered
using, and so when cleaning out their loose change from
around the house will simply throw these smaller coins in
the bin. What a waste! Encourage your child to be careful
with all denominations of money, and show them how those
small coins can add up, by starting a family small coins
box. Maybe you could use the money to fund small family
outings (a trip to the shop to get ice creams).
3. Money has to be earned.
There are many people in the world these days that dont
seem to have ever learned this lesson. They sit around
home and expect handouts so they can live, or turn to a
life of crime to fund their existence. Be careful not to
give your child money every time he or she asks, without
expecting anything in return i.e. completion of household
4. Encourage one-third savings, one-third donations,
The exact proportions in which your child divides their
money are up to each individual family to decide, based
on their beliefs and the needs of the child. This can
quite easily be achieved by providing them with 3 piggy
banks or moneyboxes one for spending, one for
saving & one for donating.
5. Avoid borrowing money wherever possible.
It is always much harder to repay money that has been
borrowed, than to save your money. Some loans, such as
home loans, tend to be unavoidable though. A good rule of
thumb is if you dont have the cash to buy it, you
cant afford it!
6. Money isnt your best friend so dont let it
control your life.
Quite simply, try not to become so over committed with
your finances, that you are forced to work 60 to 70 hours
a week to continue the lifestyle. If you do, then you are
letting the money control your life. You dont
usually need the fancy car (and car loan) or overseas
holiday (and personal loan). All these things are nice,
but only if you can easily afford them!
7. Show them how to budget & live within their means
This is one of the most important skills that your child
must know, that so many people dont seem to know
how to do. Recent surveys have shown, that many people
are spending 10% to 20% above what they earn. They are
earning enough money to fund their lifestyle, but they
simply arent budgeting it, and so are wasting large
amounts of money each week.
With these seven lessons under their belt, they will be
off to a great start, but there are many more money
skills that your child will benefit enormously from
learning. To learn more, visit the Kids Money Tips web
Incoll is the author of Kids
She has helped show thousands of parents how they can
teach their children how to manage their money
responsibly. Visit her site to receive free tips,
information & worksheets