Top 5 Real-Life Finance Lessons For Your Kids!
Like a fairy-tale curse, poor money skills can screw up your kids, their kids and their kids’ kids. Good money habits, on the other hand, can insulate kids from making major mistakes later in life and will positively impact their quality of life as adults. To raise money-smart kids, parents should start at a young age and regularly reinforce money lessons as children grow up. We have listed for you the top 5 real-life finance lessons for your kids!
1. Job Hunting
If you ask a 5-year-old where money comes from, his answer will probably be “the bank,” “Mom and Dad,” “the president,” or “rich people.” He might not fully understand that your family affords things by working. To help him learn about earning, talk about jobs and how people are paid to do them. Then, make a big deal about his having a job of his own. You can “hire” him to do extra chores, he can sell hot chocolate or old toys, or he could collect and recycle cans to earn cash.
Good Things Come to Those Who Wait
Teaching kids delayed gratification will help combat the “buy now, pay later” mentality that could mire them in credit card debt later on. So, as much as you can, reinforce the idea that waiting pays off. For instance, make a homemade pizza together with all the ingredients your child loves; then microwave a store-bought frozen one. The homemade pie takes longer, but it tastes way better.
3. Allowance Bank
Making cash available to your child is a must. If she never has access to money, she’ll never learn to handle it. Determine the amount of the allowance (experts suggest $1 per year of age per week). Then make it interesting by playing “bank.” When the time comes for an allowance, issue your child a pretend check. Tell her that she’ll need to play “bank” with you to cash the check. Follow the same steps you would take at a real bank, asking her if she wants to have all the money now or keep some in her account to take out in the future. Discuss the reasons she might want to save some. For instance, say, ‘I know you’ve been wanting a new Barbie doll. If you save up for three weeks, you’ll have more than enough to buy the set you want.’
4. Don’t Spend It as Soon as You Get It
Curbing impulse buying goes hand in hand with teaching delayed gratification. Show by example. Before you go shopping, create a budget. Outline what you’re going to buy, what stores you’re going to, and the price range for each item. Then compare prices online and clip coupons together (consider letting your child keep the savings so she sees that bargain-hunting pays). She’ll learn that planning purchases before you buy is the routine.
5. Reality Check
Your daughter is trying to convince you that she needs those night-vision spy goggles. Just like she needs a new bike, a remote-control car, and a puppy! Playing the “Gotcha!” game can help her better understand wants and needs. First, give her a simple refresher on the difference between the two. “You can tell her that a need is something she must have in order to survive, such as air, food, water, and shelter,” says Pearl. “Explain that a want is something she’d like to have.” Then, set up a family “Gotcha!” jar. Any time a family member says “I need” when it’s really a want, someone else shouts “Gotcha!” The person who made the mistake has to put a quarter in the jar, Pearl explains. Your child will be on alert and will love it when you slip up (you will). Periodically, as the “Gotcha!” jar fills, your family can donate the funds to a charity for people who really do need things.