Teaching Kids About Money

Monetary decisions for adults can be difficult and stressful particularly if they were not taught to work with money from an early age. Teaching kids about money is a fundamentally essential lesson in preparing them for responsibility in adulthood. The moment children start learning to count, lessons should already begin. There are several simple tips to consider when applying these lessons.

Tips to Teaching Kids about Money

• Setting goals: Children’s social worlds are consumed with sweets and dreams of toys they want. Many parents either do or do not buy these treats without giving much thought to the fact that there is an extremely important life-lesson to teach, right in front of them. Kids should be taught to save towards their goals. They may save a little bit and decide they want to spend their accumulating money on an (instant gratifying) toy the moment they see it. It’s best to let them tantrum, they’ll get over it. Rather they continue to do chores and save towards their goal. Once they buy that, much anticipated, toy with their own money that they worked for, they will begin to understand the value of money and achieving goals.
• Needs and wants: Kids “need” everything. They “need” chocolate to make their sore tummies feel better. They also “need” face paint when they have chicken pox, to make them feel better. It’s hilarious but also important to teach them the clear-cut difference.
• Pocket-money: Children should get pocket-money from an early age as it’s grounding for them to understand the direction they want their own money to take. They should save at least ¼ of their allowance to understand the important of always ensuring you have money in the bank. Rainy days come more often than not and that’s when they will understand the difference between want and need. Always save, save and then save some more. Savings should always have goals. For adults, it’s a retirement lifestyle.
• Savings account: When teaching kids about money activities, take them to a bank and assist them to open their own bank account. It’s very important that they understand the value of putting money into an account, to grow. Money doesn’t gain interest in a moneybox at home, so tell the kids that banks are huge moneyboxes that will help their money grow “bigger” with them.
• Credit: Teach kids about credit and how it can be a very bad decision if made without the correct guidance. It’s always best to pay cash, but if credit cards are used then explain their role in the greater scheme of things. Explain their pros and cons to ensure a clear understanding of credit.

Finally

It’s fun teaching kids about money, but they must also understand that there is more to life than lots of “moolah.” It’s good to have money in the bank; the upside is the privilege to experience and live life to the fullest, but money should not consume anyone.

Vida Denning understands the importance of teaching kids to save money. Her kids are always trying to break her bank for new toys. With an interest in understanding more about money Vida spoke to an MT4 Forex broker who recommended a demo forex trading account. It has been extremely educational and most interesting thus far.