10 Money Lessons to Prepare Your Kids for the Future >
One of the most important tasks any parent has, is to prepare their child for a successful life as an independent adult. While this means investing time into a lot of lessons about cooking, cleaning, and personal growth, it also means paying some attention to the concept of personal finance, and how your child can achieve financial freedom.
As more children struggle to stop relying on their parents for cash handouts, it's never been more important for children to get the basics on money management down. Here, we're going to look at 10 of the lessons that you should use to prepare your kids for the future and help them maintain control over their spending habits.
1. How to Set a Goal
Goals are a great way to keep children focused on the long-term when they're desperate for instant gratification. They don't want to be using A goal can be the incentive that encourages your child to make money, save their cash, and learn how to spend it more wisely.
From an early age, try to teach your child the value of making small sacrifices to support long-term goals. For instance, when you start giving your kids pocket money, you could ask them what they plan to do with that cash and help them to think of a long-term goal. This could stop them from spending all their weekly money on sugar.
2. How to Track Spending
Even when your children are young, they should be learning the basic concepts of what it feels like to earn and spend money. If you give your child an allowance, but also buy everything they want for them too, then they're not going to understand what it really means to save. Tell your child that you expect them to pay for the things they want (besides birthday and Christmas presents) and let them deal with the disappointment of not being able to afford something when they spend poorly. This will help them to come to terms with the concept of tracking the cash they spend.
3. The Basics of Debt
While you don't necessarily need to get into a discussion on the different kinds of loans that a child might get one day in their future while they're still ten years old, you should give them an insight into what debt really means. Explain the concept of interest and help your youngster to understand that borrowing money comes with consequences. If they think they can borrow cash from someone bigger every time they struggle, they're more likely to use their money carelessly in the future. You need to be careful when using services like no credit check loans.
4. Show them the Value of Earning Money
There are plenty of great ways that you can demonstrate the value of earning an income to your youngster. For instance, if they're still too young to get a job, consider giving them an allowance only when they complete certain tasks around the house, like tidying their room or helping with the laundry. This will help them to associate working hard with getting a reward. In life, we don't get anything for free, and it's worth helping your youngster to come to terms with that fact early on.
At the same time, remember to encourage things like paper rounds, lemonade stalls, and even part-time work when your child is old enough.
5. Teach them About Sales and Discounts
Sometimes, knowing when to buy something can be the key to getting the best deal on a purchase. Remind your youngster that patience is a virtue, and if they wait for the item they want to go on sale, rather than trying to buy it straight away, this could mean that they end up with more money in their pockets to spend on the other things they want. Take your child for a trip around the sales one holiday season if it's safe and show them how much you can save at the grocery store just by using discounts, shopping off-brand, and cutting out coupons!
6. The Fundamentals of Saving
It's common for children to want to use the money they receive as a gift the second it's in their hands. However, they might be receptive to the concept of making the money last if you point out the advantages of saving. For instance, when your child wants something expensive, consider telling them that if they save all the money they make for the next six months, you'll match what they've saved to help them back that all-important purchase.
7. Knowing When to Cut Back
While your child probably isn't going to get into debt when they spend all their money collecting a new toy, trending item, it's worth discussing the importance of cutting back with them if their obsession starts to grow too great. Show them that sometimes it's important to think carefully about whether you're really spending your money on the things that matter most.
8. How They Won't Get Everything They Want
Besides "I Love You" one of the most important things you can ever say to your child is "no". While it's great to see your child's face light up when you buy them the thing they want most, saying yes too often can lead to a spoiled child who believes they can always get their way. Instead, encourage the importance of learning how to make choices in life. For instance, if your child has to choose between a new toy or going to a movie with their friends, it will help them to re-think the importance of smart spending.
9. Basic Investing
Your child probably isn't going to have a stock portfolio before they leave school, but you can teach them something about the concept of compounding interest, and how you can get rewards for saving your money in the right ways. For instance, you could consider showing them the interest you get on your savings account and tell them that if they save their own money in their piggy back, you'll give them a small percentage of "interest" too.
10. When to Give Back
Finally, sometimes, teaching your children about money is about more than making sure they know how to get the most out of their finances. If you can encourage your child to give something back to people less fortunate them with toy donations and even volunteering sessions, you can help them to understand the value of money a little better, and even help to generate some great habits for the future.
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