How To Teach Kids About Money
How to Teach Kids About Money – Get Ideas That Really Work
There comes a time when parents with children begin to read books and decide how to teach kids about money. This is not just one simple conversation that you have with your child, but is an ongoing process.
There is no one “book” to teach from and there is no universal method that will fit every child. You’re dealing with different personalities, comprehension levels, as well as the ability to learn.
Educating your child about money management is critical and should start at an early age. Most states have no curriculum that will teach children about money, so the responsibility must fall to the parents.
Some suggest that the decision on how to teach kids about money is when the child can understand the difference between needs and wants. Until they know the difference, you will probably have a difficult time explaining how their money should be spent.
The difference between needs and wants generally becomes clearer as the child nears school age. We’ve all heard young children in stores throwing a tantrum because the parent told him that he didn’t need another toy car or perhaps candy. They need to be shown with a detailed explanation what things are needs and which are wants.
When that is accomplished, you’ve taken a big step in learning how to teach kids about money. When you’re teaching kids about money, you need to be sure to touch all of the bases regarding money. Begin with how your money is earned, and then how it is spent. Then you can show how it is spent on the mortgage or rent payment, utilities, insurance, food, clothing, medical bills, car loan and expense, saving, retirement, etc.
A child in first grade might not understand all of those things, but as they get older it will begin to sink in. You can show him how your paycheck is deposited into your bank account, and then how you write checks to pay all of your bills and other expenses. There is no need to let them see the actual numbers, only the concept or procedure. This can be reinforced by showing him that these are all needs to support the family.
At this point, it usually is a good time to bring up the concept of creating a budget in order to have better control of the spending. Again, without showing him actual figures, you can list the various budget categories to show him just where the money goes.
There are many opinions both pro and con regarding an allowance for kids, and we do recommend that this be done. Parents earn money by doing work and children should be taught the same. There are some things that the child should be expected to do without getting paid, and these can be spelled out clearly.
We have many individuals in our society today that simply don’t believe in working and are content in receiving welfare handouts. Before any of you call me to task on this comment, I realize that there are many on the welfare rolls because of various reasons beyond their control. I understand that, and my problem is the others that are too lazy and are nothing but parasites living off others. I don’t want my children to be in that group, I want them to realize that they must work to earn money…there can be no other way!
That being said, we taught our kids to work hard and to give 110% whoever they worked for. I’m happy and thankful to report that it paid off big time and we’re proud of them.
At this point, most parents feel that their job on how to teach kids about money is completed. We recommend that you continue with the lessons and include borrowing, interest, and especially credit cards. As they begin to consider college, they need to know the importance of a good credit score and rating. If you want your child to be financially responsible, you need to cover this topic in great detail.
If your child is going to anticipate large student loans for college, it might be a good time to revisit the need and want topic again. Every child doesn’t need to attend Harvard or Yale to get the degree they have decided upon. Community college for a couple of years can reduce the student loan requirement substantially, and perhaps a local state college can help to keep the loans low as well.
You don’t want your child to graduate from college with huge student loans and/or credit card debt that they will be paying on for many years. It’s true that children sometimes have to learn from their own mistakes, but we as parents need to do our best to keep those mistakes on the low side. We can’t micromanage their finances for them, but they need to know that we are there for them with good sound advice.
So, have you found out how to teach kids about money? Do you have some secret method that worked well for you? We’d love to hear about it. Please do us a favor and share your experience with us in the comments below.