What should you teach Kids about Money?

Teach by example with age appropriate themes that cover four practical topics: budgeting, saving, shopping and credit.

Unfortunately, basic budgeting is not taught in schools and children need to have a plan for their money. When your child has learned to multiply it's time to explain the basics of interest. Keep a jar in the kitchen and as the jar fills with loose change, children learn the first steps towards savings.

Shopping strategies such as comparison shopping for prices and quality and a discussion of wants versus needs is important. Our wants are unlimited, but our money is not.

Explain that credit is not free money; it may get us things faster but we may end up paying more over a long period of time. Our handling of credit obligations, good or bad, is reflected in a credit report that many businesses, lenders, and employers view. Misuse of credit may affect our future ability to have a place to live, work or borrow additional money.

In addition, children need to develop strong values and morals about what money is and isn't. Money is not taboo, evil or dirty, nor is it a measure of personal worth. Children should never get the idea that the more money you have the more worthy a person you are. Money is merely a 'medium of exchange'. Saving and setting goals for large purchases builds self-discipline as opposed to immediate gratification. Kids might not understand what an annual percentage rate is, but somewhere along the road they need to learn that it is a good idea to repay a loan. Help them to understand the importance of repaying a debt; when you borrow money you promise to repay it. You want to make good on your promise and build good credit.

 

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