Top 5 Things to Teach your Kids about Money
Most experts agree that if we’d been better educated about money, the financial crisis of 2007 might never have happened. Here are some simple ways to prepare your children to handle money responsibly.
- Money is attracted to diligence. Give your kids a weekly allowance and assign basic chores as a requirement. If they don’t do them, take their allowance money to pay a sibling or maid to do it for them.
- When you want something, sometimes you have to wait. We all like instant gratification. But the sooner kids learn how to delay gratification until they can afford to make a purchase, the less likely they are to have credit problems.
- You can’t afford to buy everything, so decide what’s most important. Teach kids there’s only so much money to go around. They need to set goals so they know which purchases are really necessary.
- When you save money, compound interest can make it grow. This is a magical concept for kids, and it’s a great way to get them to save. Teach them to set aside at least 10% of their allowance each week for investing in their financial freedom. That money is not for spending — it’s for investing in their future!
- Credit cards aren’t magical money machines! Unless you explain how credit cards work, kids assume there’s an endless supply of money. Tell them about debt, interest, and the importance of paying off the balance every month.
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