Simple Tips to Teach Your Kids Money Lessons for Life
Simple Tips to Teach Your Kids Money Lessons for Life
Every parent knows they need to teach their children about money. The problem arises when it is time to do it. You may find yourself wondering what you should teach them and what methods are best. You know they need to learn how to budget and save, but did you know they also need to know about loans and credit cards? There are many, often overlooked money lessons that should be taught to prepare your child for a financially sound future. Following are some simple tips to teach your kids money lessons for life.
Budgets, Planning, and Savings
One of the first items in teaching your child about money is to discuss budgets, planning, and savings. You want to explain the importance of each of these financial staples.
Teaching them to start saving can be easy and fun. If they receive an allowance, you can use this to start the topic and get the learning rolling. You can even use a jar and your daily change to show them how even the smallest amount can quickly grow. Have your child start out by putting their money in a piggy bank or box.
The next step will be to teach your child to make a budget. The budget will include discussions about savings and planning for future desires. Have them set a goal for what they want to buy and help them to understand how they can achieve that goal with their allowance and budgeting their money correctly.
Teach them that it is essential to pay the money into their budgetary box before they spend any of it. This practice will teach your child the importance of paying their bills and necessities before spending on extras.
Loans and Credit Cards
While budgets and savings are the essentials of money training for children, they also need to learn about loans and credit cards. It is crucial for children and young adults to learn these lessons before they find themselves neck deep in the debt the wrong choices can cause.
An excellent form of teaching your children about loans is to visit loan and credit card sites and explain to them what each type of loan is for and how it can be used as well as what credit card fees are and the importance of interest rates. This preparation will show them as they get older that when they find themselves with an emergency, there are resources they can turn to for help.
You may also want to teach them about the different types of loans that there are, so if they ever find themselves with this need, they are not confused, and they know what to look for. Teach them about mortgages, car loans, personal loans, collateral loans, and how credit cards are loans often with higher interest rates.
If your child is old enough, you might want to go as far as to explain consolidation loans or refinancing car loans or mortgages. Many of these are items faced by adults daily, and it is better to learn in a fun way then being thrown into it when you have a need to fill.
Making it Fun, so it is Unforgettable
Throughout the money training process, you want to make sure your child is having fun, while still understanding the significance of what they are learning. This tactic will make your child excited to learn, and the memories made will be something they carry with them throughout their lives.
When they have reached their teen years, you might try money experiments or maybe make a small loan that your child must pay back. Make sure you add interest to this loan so that your child learns the way interest rates work and how to budget accordingly.
The key to your child’s future financial success is learning the value of money when they are young, giving them a continued education throughout childhood and a great foundation for their start down the road to financial independence.
