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10 Important Money Tips You Should Teach Your Kids

Money is a huge part of life, however until it is explained, it can be quite a confusing concept for young children. When kids watch the exchange of goods and services for money, they usually donق€™t understand how it works. Itق€™s up to you to instruct your children on how to be financially savvy so that they can grow up with good financial habits. If you arenق€™t sure where to begin then here are ten money tips that you should teach your kids.

Money Doesnق€™t Grow on Trees

When children see money being handed over by a bank teller or popping out of an ATM, it can be hard for them to understand that money is not an infinite resource. Make sure that your kids know that people have to work hard to earn money, and that the bank is just somewhere to keep money safe. A good way to teach them about the value of money is to set up a few chores that they can do around the house in order to earn an allowance.

Do Not Exceed Your Budget

Some financial experts recommend that you give your kids an allowance every month instead of every week in order to teach them how to properly budget their money. If they end up spending all of it at once and then donق€™t have any for the rest of the month, itق€™ll teach them the importance of budgeting their money as well as the negative effects of overspending. Over time you should see your child began to grasp the concept of spreading their money out throughout the month instead of blowing it all in one go.

Good Things Happen if You Are Patient

Teaching your children the wonders of delayed gratification will aid in their desire to buy things now and pay for them later, which is a mentality that could get them in huge trouble when it comes time for them to open up a line of credit and start dealing with credit card bills. It is a good idea to reinforce in your kid that waiting and being patient pays off in the end. For example, try creating a homemade pizza with all of your kidق€™s favorite ingredients and then purchase a store-bought microwave one. Although the homemade pizza will take longer to make, itق€™ll be much more satisfying.

Donق€™t Spend Money Before You Receive It

Curbing your childق€™s impulse to buy things goes right along with teaching them about delayed gratification. In order to show the importance of saving money and not over spending, it is important that you teach them by example. When you go shopping with your kid, sit them down before hand and create a game plan and a budget. Determine exactly what you are going to purchase, what stores youق€™ll go to, and the price that youق€™re willing to pay for each product.

Saving Money Can be Fun

Does your son want a new Star Wars figurine? Or does your daughter want a new dress? Tell them to start saving! Once he or she has saves up enough money, show them the satisfaction of saving by taking them to the mall and letting them hand the cashier the money themselves. Your kid will never forget the lesson of how good it can feel to save up for a goal and receive an award at the end. You may even want to consider allowing your kid to keep the money they are saving in order to be reminded of the light at the end of the tunnel. They will quickly learn the lesson of planning their purchases in advance instead of impulse buying.

Always Keep Track

When your kid knows exactly where there money is going, itق€™ll be a large step toward them becoming financially savvy. Get your child to use a computer or notebook in order to record everything he or she buys, and to keep track of the money that they are spending. It is also a good idea to create a file so that your son or daughter can keep statements and receipts.

Create Wish Lists

It can be difficult for children to have priorities, so have them create a wish list of all the things that they desire and are willing to spend their money on. After this it is a good idea to get them to rank their wish list and to discuss why they want that item and how important it is to them.

Maximize Your Savings

Once your child has grown up a little, it is a good idea to introduce them to a savings account where they can earn some interest. For example certificates of deposits or savings bonds are always a good place to start.

Skepticism Isnق€™t Always a Bad Thing

While you donق€™t want to instill that companies are out to steal your money, there is a healthy amount of skepticism when dealing with buying products. Teaching your kids how to resist commercialق€™s tricks will allow them to be much more financially savvy.

Share with Those in Need

Get your children to give some of their allowance to a charity once in a while. Not only will it teach them how money can be utilized in order to help those in need, but it will also teach them how to be generous and giving.