3 Tips on How to Teach Kids Important Personal Finance Lessons

Schools are doing a great job of teaching kids to become responsible and productive members of the society. Schools are designed to teach reading, writing, and the old-fashioned arithmetic among other things. Unfortunately, the educational system appears to be ill-prepared to give kids one of the most important set of skills that has a direct impact on the quality of their lives when they become adults.

Schools rarely teach the concepts of money, how to manage money effectively, and how to get on the path to financial freedom. However, parents can’t afford to see their children grow into adulthood without at least a functional knowledge of how to handle personal finances. This piece provides insight on how you can teach kids some important personal finance skills.

3 Tips on How to Teach Kids Important Personal Finance Lessons by North Carolina Lifestyle Blogger Adventures of Frugal Mom

  1. Teach kids financial responsibilities by letting them pay for stuff

If your kids get an allowance, –maybe a weekly stipend, incentive for doing chores, or their earnings from mowing the neighbors’ lawn – you need to teach them the concept of financial responsibility. In teaching financial responsibility, you let your kids make buying decisions so that they can learn to identify products and services that are worth buying.

For instance, you could have a blank rule in which you pay for the essentials while they have to fork out money for non-essential expenses from their allowance. Hence, you’ll put food on the table but you won’t help them with cash when next they decide that there are going on a movie night with friends. Putting your kids through the motions of actually paying for goods and service out of their pockets will teach them an important lesson about the transfer of value and they won’t go through life with a warped sense of entitlement.

  1. Let kids understand when and why money is sometimes tight

Life is not a bed of roses and people usually run into some rough patches in their finances due to factors beyond their control.  If you are having financial difficulties, it is okay to share your financial woes with your kids, if they are at the appropriate age to understand and not blurt out “your secret” when next you are meeting with friends and family.

The holiday season is when kids tend to ask for new smartphones, sneakers, and life-sized dolls. However, instead of beating yourself up over a perceived inability to buy them their wants, you can use the opportunity to explain to your kids why you can’t afford their wants but you’ll do your best to provide their needs even though their wants are important.

Helping your kids to understand why you are low on cash will curb awkward instances at the supermarket where they may want to buy candies when your desire is to dash in to buy groceries for the week and dash out.

  1. Let kids appreciate the importance of saving money

Saving money can be somewhat difficult especially when you have to stretch each dollar to make ends meet and you have a high list of unpaid bills on the sides. However, helping your kids to develop a savings culture very early in life will go a long way in improving their odds of financial success when they grow into adulthood. Kids can learn to save money by saving up a part of their allowance, cash gifts, and their earnings.

The old-fashioned idea of a piggy bank kept by the child in a “secret” place in their room could also help to build the savings culture. However, you need to be sure that you only reward and reinforce the savings culture instead of unintentionally frustrating their efforts. Your kids’ piggy bank shouldn’t be your go-to bank when you are short on cash, especially if you are not prepared to pay them back with interest.

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