Articles & Tips - Parenting - Teach Kids About Money And Saving - The
10 Vital Lessons Your Child Must Learn!
Teach Kids About Money And Saving - The 10 Vital Lessons Your Child
Must Learn! - by Rachel Incoll
Your 5-year-old daughter has started asking for money to buy sweets
and toys. She obviously has a good understanding of the concept of exchanging
money for items she wants or needs, but what are the important lessons
you should teach kids about money and saving. You want to make sure that
she doesn't grow up into one of those kids that are constantly pestering
mom and dad for money, running up credit card debts as a teenager, and
not having any idea how to save.
There are 10 basic money skills that every child should learn before
they enter the teenage years. It's never too late to learn, but most children
are far more receptive to ideas from their parents before they hit the
age of thirteen, than after.
1. Money doesn't grow on trees! One of the best known and oldest quotes
around. It is important that children understand from early on that money
is a limited resource, that mom & dad's bank account will eventually
run dry if they keep making withdrawals from it.
2. People go to work to earn money. Money is something that needs to
be earned, you are never going to become financially secure sitting around
not doing anything, and expecting handouts from people.
3. Credit cards are a form of borrowing. Believe it or not, surveys
have shown that an alarmingly high number of teenagers don't realise that
credit cards are a form of borrowing. If they don't understand this basic
concept, it leaves them at risk of running up crippling credit card debts.
4. Avoid borrowing money where possible. Wherever possible, money should
be saved rather than borrowed as borrowing attracts extra costs such as
interest, which can in some circumstances, double the amount of money you
need to repay.
5. There is good debt & bad debt. No debt is really all that good,
but some forms of debt will make you money while others cost you money.
Good debt can include a home loan, investment loan or business loan, as
these items have a tendency to make money above the amount of interest
you have to pay. Bad debt can include credit cards, personal loans or car
loans, as these items never make you any money.
6. If you don't have the cash to buy something, then you can't afford
7. Spend less than you earn. Many people these days are spending 10%
to 20% above what they earn, creating a vicious cycle of high credit card
interest rates, long hours at work to pay the credit cards & in some
cases bankruptcy. The knowledge of how to budget your money seems to have
been lost, make sure your child learns this important lesson!
8. A portion of your money should be given to the needy. Around 10%
of your money should be given to those who are in need/charities.
9. Pay yourself first. This is what I call your sanity money! Allow
10% of your money for yourself to spend however you wish.
10. Save at least 10% of your money. Like budgeting, the skill of saving
money seems to have been lost over the last 20 years, with fewer people
than ever before regularly saving a proportion of their income.
With these lessons well and truly learnt, your child should have no
problem managing their finances in a proper manner, and avoiding the credit
trap. Don't risk your child becoming one of the hundreds of thousands of
young adults that go bankrupt each year!
About The Author
Rachel Incoll is the author of Kids Money Tips. She has helped show
thousands of parents how they can teach their children everything they
need to know about money in just a few simple steps. Visit her site http://www.kidsmoneytips.com
to find out how your child can learn to save & manage their money more