Young children understand very quickly how their world works. They love to test everything and see the reaction that is caused (such as playing in Mommy’s makeup or Daddy’s socks). As their understanding of the world grows so does their knowledge of how things work.
Once of the lessons you can teach your children at a young age is the idea of money and how it works in the world you live. Even if you’re children aren’t very young, it’s never too late to take the opportunity to teach them.
These 5 financial concepts are easy for you to teach and will help set your child on a path to financial success. Are you ready?
5 Financial Concepts All Children Must Know
Teach them the value of saving their money. You can do this by helping them decorate a mason jar (or if you have the finances, you can have them pick out their own piggy bank) to place their hard earned money. Make saving money sound exciting and fun.
If I child thinks something is boring or too tasking, they are not likely to do as we ask. Teach them that a rich man does not become rich by how much he earns, but by how much he saves.
No, you don’t need to teach them about stocks, bonds, or CDs just yet. However, teach them that every purchase they make is an investment. Buying a candy bar is an investment that brings about very short returns (a satisfied, happy feeling). Saving up to purchase a bicycle will take longer but the physical health and exercise are the greatest return. Teach them the bicycle will also last longer than the candy bar.
Teach children to spend wisely. (See #1 for encouraging savings). Help them understand once they spend the money, it’s no longer available. It’s gone. This is important: unless it’s an absolute emergency DON’T BAIL THEM OUT!
As they begin to understand this principle, their earnestness to carefully select what toys and treats they want to purchase will increase. Learning this concept will most likely be done through trial and error. It might take them a few purchases to realize mom/dad/grandma/grandpa/aunt/uncle will help in emergency situations, but ultimately it’s up to them to provide for their wants.
The value of what they are purchasing (or wanting to save up for) could last longer than the product itself. I’ll explain. For example, a child might be saving up for a tablet. The ability to download educational games, books, and other learning resources will exceed the value of the tablet because of the possibilities that will open up to them.
With this product, they will also learn responsibility. Parents can set rules, bounds, and guidelines for the child’s use of the tablet. If they decide to purchase a “quick satisfaction” item (such as the candy bar example) hopefully they will quickly realize this isn’t the best “value” for their money.
Teach children to give a certain percent of their income to the poor. This could be to a church organization, community outreach program, or another cause of their choice. By teaching children to tithe their money FIRST, it will help them to learn how to live on 90% of their income instead of the full 100%.
They will also learn to help others and be more sensitive to the needs of those around them.
As you teach your children these five financial principles you are helping them towards the path to financial success as adults.
Is there a financial lesson you teach your children? Or is there a financial lesson your parent’s taught you? Leave a comment below and let us know!
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