Value of a dollar
Let’s face it, kids have a hard time understanding the value of things. They don’t have the life experience to help them know what something is worth. They think very much in the moment. If left unchecked, they will have a harsh reality when a negative experience solidifies how they view value.
The most important lesson as it pertains to money is the value of time. Recognizing how much time it takes to generate the money is a foundational truth about how they will value time and what it produces.
How many times have you walked through the grocery store with your children and hear “I want that…” a million times? If they are given opportunities to connect the idea of how much something costs and how much time it actually takes to earn that money, they will grow into understanding the proper relationship between time and money.
Understanding the difference between wants and needs
As adults we can still have the problem of knowing what a want is and what a need is. Growing and maturing into life, we realize making the hard decision between the two will lead to more responsibility with our finances. It can sometimes be hard to order a water instead of a soda, but you know saving the $2 each day for lunch will allow you to invest in your future.
Taking some of these habits we have learned as adults and putting them into practice with our children is going to set them up for a much better life. Ask your children if what they are wanting is actually a want or a need. Have some dialogue about it. Get them to think about it before deciding. Then, help them understand the reward of putting off their wants to achieve something more substantial in the future. Start small. It will take some time to get them to really understand it.
Saving is good
Just like above, putting off wants for later can be good for your child. Taking it one step further to making it a habit of always saving a portion of what they earn will add another brick to the foundation of financial responsibility.
These habits can be taught and learned just like brushing your teeth twice a day. Children don’t intrinsically know why they should save their money, but you can take them through a series of short term exercises that will help them connect the dots.
For example, have them do some chores around the house and pay them for the work. Ask them to put aside a small percentage of their earnings so they will have money in the future, in case they need it. Let them spend the money they earned on something they see at the store. Try to keep the cost of what they buy equal to the money they have to spend. Do this once a week for 4 weeks. At the end of the month, have them count up how much money they have saved. Help them understand they were able to keep some of their money while also spending some. It shouldn’t take long for this habit to set it. What’s better than having the best of both worlds – money and things?
The next obvious step is to open up a savings account. Then you can take your child to the bank each month and they can see their savings grow!
Want to more tips of how to teach your children about money? Check out this cool article we found on Business Insider.