It is a sad fact, but many people retire only to live in poverty. After working forty plus year, and over that time earning hundreds of thousands of dollars, many have very little at the end. What happened to it all? Well, most of it would have just slipped through their fingers. Why? Well, schools are very good at teaching us many different subjects, including math, but the one thing they do not teach is personal finance, and how to make money work for you rather than you working for money. In this post I’ll give you practical Tips to teach your kids about money, that will put them in the path to financial success from a very young age. Ready? Let’s begin.
So when and how can our kids learn about personal finance? Well, it is up to us as parents to teach them.
The problem is that many adults are not too good at managing their own money either, again because we were not shown how to in our youth. I am not suggesting that we start showing mortgage and bank statements as some parents, especially with pre-teens and teens, may feel uncomfortable about their financial status. However, what we can do is advise our children of the pitfalls and dangers that await them in later life. Draw from your own life experiences and dealings with banks and other financial institutions. The fact that at certain times in our lives, things are going to happen that will affect our personal finances. Certain things will be out of our control and not of our own making, but there will be times where a choice has been made that “seemed like a good idea at the time.” We have all been there, done that, only to pay the consequences at the end.
So, how and when do we start them off? As young as possible, as long as they understand the basic concepts of money. Usually, by the time a child is about three years old, they know about pennies and dollars and understand the concept of handing money over in order to purchase goods.
In this post, I am going to give you some tips and ideas to help your kids to learn about money, and lead them to the right path that will teach them financial prosperity.
1. Buy a piggy bank for your younger children to start learning about money.
Allow them to choose whatever color, shape, or size they wish. Invite them to put their pennies into their piggy bank. Occasionally they may count their pennies and reward themselves if they want.
2. Once they have proved themselves to be able to handle their pennies, take them to open their bank accounts.
Most major high street banks and building societies have outstanding savings accounts for kids. Depending on their age group, they may be offered some incentives, e.g., fun packs, money-off vouchers for CDs, DVDs, computer games, etc.
3. Many kids think, “money grows on trees” let them know the truth.
Let them know that YOUR hard work brings the money home. Whether or not you work or you have inherited a large fortune, do not encourage laziness in your child. I am sure there are loads of chores around the house, washing the dishes, cleaning the rooms, etc. Give your kids an allowance but let them work for it. They also need to be able to work for free sometimes to learn the value of hard work. Teach them the importance of EARNING THEIR MONEY.
4.Teach them the value of saving money.
Many relatives nowadays tend to give money for birthdays and Christmas, especially for the over 10s. At this age, their tastes are constantly changing. Encourage them to save 10% of their gifted money. This may be only a small amount, but it is an excellent habit to get into. If you are reading this now, as a middle-aged parent, imagine how much you would have in the bank today if you had saved 10% of everything you had ever earned. A lot, right?
5. The art of spending money wisely.
Teach them to simply be careful, spend wisely, and acquiring a regular savings habit. Teach your kids that donating money to worthwhile causes is a noble thing to do. This could be to the local hospice, the homeless, or to a charity of their choice. This would help them become more rounded, more respectful of others regardless of the situation, and become more appreciative of their own lives and their own prosperity. They would learn that the money returns to you in more ways than you could imagine.
6. Encourage your child to purchase a journal or a diary where they can record their dreams and desires.
This allows them to dream big and look forward to their lives ahead-filled with prosperity. There is nothing wrong with accumulating wealth to fulfill these desires.
7. “Filthy lucre” and “Money is the root of all evil” are phrases you will often hear people say. Erase those phrases from their vocabulary.
Money actually brings enormous good into the world. Creating wealth helps create jobs for others. Investing in business helps to bring solutions to people’s lives by way of innovative products and services. Acquiring a great fortune allows you to donate more money to charity or even start your own trust fund. Therefore, as you can see, money is neither good nor bad; it is what you do with it that makes the difference.
8. “It takes money to make money.” What about investing?
Unfortunately, it also takes money to lose money. Teach your kids the value of caution when entering into financial affairs. Remember the golden rule of any high-risk venture. Only invest what you can afford to lose. Moreover, let them know that many self-made millionaires started with literally nothing.
9. Teach them about debts when they understand better about money.
Debt is one of the greatest social diseases of our time. The price to pay for the “have now, pay later” philosophy is that you certainly will pay later. Unfortunately, some high street banks have contributed to this philosophy. My own bank had posters in the branch, stating, “why wait, have it now!” Debt imprisons you in a job you do not like, creates stress and anxiety in your life, and erodes your wealth creation program. You will never become rich while you are in debt. Teach your kids the value of delayed gratification. “If in doubt, go without.”
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10. Your financial health is the difference between how much money you earn and how much you spend.
It therefore makes sense not to pay any more money for something than you have to. Teach your children that bargain hunting does not make you a miser, just a sensible individual. If you see the same item, in two different shops with a 20 dollar price tag difference, from whom are you going to make the final purchase?
11. Teach them to be wise with money.
Eventually, everyone is offered a “sure-fire” method of making a fortune, whether it is the three-card trick, a once-in-a-lifetime investment plan, or some time-limited business opportunity only available to a select few… Always check these “opportunities” with a fine-toothed comb. Do not part with any money and remember, if it is too-good-to-be-true it is usually is. Teach your kids that wealth creation is a timeless and straightforward process based on common sense.
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Final words about Tips to teach your kids about money.
Teach your kids the timeless truths of acquiring and keeping wealth. Like most parental advice, they probably will not appreciate it now, but later life, they will be thankful that you did. Knowledge truly is the most precious gift you can give to them.
I hope I was able to inspire you with this post; feel free to share it with other parents if you enjoy it.
Zadi, xo.
