The best lessons that I ever learned about financial responsibility were from my Mom and Dad at the kitchen table. They taught me:
- The value of money
- How to spend wisely
- How to save
Even though, I was taught these lessons in the late 1960s and 1970s; I firmly believe these are still valuable lessons that every kid must learn, if he or she is to be financially literate.
The Value of Money
I was taught at an early age that money doesn’t grow on trees. Nowadays, some kids seem to think that an infinite amount of money comes from ATMs. There is a story going around on the internet (probably an urban legend), about a young teenager who attacked an ATM when it wouldn’t give her any money, because there was no money left in her bank account. Little did she realize that the amount in her bank account was directly linked to the amount of money that she could withdraw from the ATM. She thought that the machine printed money and that she had an unending supply at her disposal. Obviously, she needs a lesson in the value of money!
The easiest way to teach your children about the value of money is to give them an allowance for chores performed around the house. By tying their allowance to their chores, you are teaching them that money is a means of rewarding people for the work that they perform.
Teaching a child how to spend his or her money has to be one of the most difficult things to do. For many of us, our first inclination is to tell the child what the money can or should be spent on. Try giving up that urge to control your child’s spending habits; your job is to guide your child in the decision making process. There will be times when your child will spend his or her money foolish, but treat that as a learning experience. Fight the urge to rescue your child – don’t give him or her more money; after all you don’t get extra money if you overspend.
Getting into the habit of saving money at an early age will pay off in the long run. I strongly suggest that you go to a bank with your child and open an account in his/her name. The idea behind this, is to teach your child to save for a rainy day. Too many adults have never gotten into this habit and unfortunately they find themselves living pay check to paycheck. Habits started at an early age often continue into adulthood, thus ensuring that your child will have some cash in the bank.
Bank accounts can also be used by your child to save for that special ‘something’ that he or she wants but doesn’t have the money for. Simply put, it teaches them not to be impulse buyers.
Many parents think that they have to be financial experts to teach their kids about money, but you don’t! Teaching your kid about money is all about common sense.
Learn how to teach your kids money management skills