It may be difficult to talk about money with your children, however, raising your children’s financial awareness does not have to be a chore. In fact, teaching your children useful lessons about money from early age could effectively make them more self aware in the future. Continue reading to learn about the best money lessons for Children and Teenagers.
You have a significant impact on your children’s financial attitudes. While some institutions provide financial education, you can’t be sure it’ll be thorough or even practical. Children as young as three years old can begin learning about money, and it’s a good idea to get started as soon as possible by having daily dialogues about money. Talk about what you’re buying or saving for, especially if it’s something for them. For the teenagers, instead, teaching them lessons about how to make money last longer and how credit cards work could really help them in the future when they enter adulthood.
We’ve come up with some simple, practical – and even enjoyable – ways to provide your children with the tools they’ll need to handle their finances as they get older.
Important Money Lessons for Children
Demonstrate the importance of work to them
Discuss with your children how you distribute any money that comes in. You don’t have to be precise with figures, but talking about how you pay for things on a regular basis might be beneficial. You might encourage kids to earn money by doing duties around the house as they get older.
List the chore/ task that needs to be done and how much you’re willing to pay for them – the more time-consuming jobs may have a greater financial incentive.
Distinction between wants and needs
You can help your children learn to save by guiding them through the decisions they’ll have to make. It’s an excellent time to urge children to consider the distinction between wants and needs.
Request that your child builds a grocery list, and then decide which products are important and which aren’t. Making spending and saving decisions now will help your children budget later in life.
Allow them to learn
Allowing your children to make their own errors is critical. Avoid giving in to plead for extra pocket money; the goal is for them to discover the natural consequences of spending or saving money without the need for a lecture.
To keep younger children engaged, help them set savings objectives and provide a chart that tracks their progress.
Allow older children to take on more responsibility for their spending, such as paying their own monthly phone bill or allowance, or repurposing their pocket money to last longer. Don’t rush things; instead, offer them control in small increments so they can learn.
Important Money Lessons for Teenagers
Show them how to make money last longer
Teenagers might find it tempting to go on a major buying spree as soon as your pocket money/ student loan/ wage come into their account. This could be fine until they live with their parents but once they’ll have to pay up rent and bills it will be very hard for them to manage their finances if they didn’t learn from a younger age.
Understanding how much money they have to put aside for what has to pay up that month is crucial. Once they’ve done that, they’ll have a lot better understanding of how much money they have available to spend.
Keeping track of their finances from teenage years will ultimately teach them one of the most valuable money lessons for the future.
Having said that, the trick to make money last longer is to make a list of things that we desires, whether it’s a new laptop or a pair of shoes, and prioritise what we want more. Adding everything we see that we would want to buy to the list and rank them based on priorities will ultimately make us think twice before making impulse purchases.
Demonstrate them how credit cards work
To be true, having a credit card comes with a few potential dangers. Teenagers are the closest ones in age to be able to get a credit card so it’s crucial for them to learn the risks and the advantages of owning one.
Mainly, falling into dept if you don’t stay on top of things: you should never use a credit card if you fear you won’t be able to make the payments, including paying for interests. However, credit cards, can be highly advantageous when utilised properly. Being a responsible credit card user is one of the simplest ways to establish a good credit score, as it is the most obvious means of demonstrating that you know how to pay your bills on time.
Every credit card is different, but essentially, they can assist you make larger purchases when you know you won’t be able to pay it off all at once but will be able to pay it off in monthly instalments. You won’t pay any interest on the purchases you’ve made if you have the self-discipline to pay the bill in full (not just the minimum payment) when it arrives. There are also certain benefits for credit card users that depend on each individual preferred banks. However, one shouldn’t choose a credit card only on the basis of its rewards.
Tell them the real dangers of debt
Certain type of debts are unavoidable (and even necessary)!
Most students would be unable to attend university without accruing debt from tuition fees and, contrary to popular belief, Student Loan repayments are achievable, simple, and always in line with your earnings.
However, if you’re not careful, some sorts of debt can be rather harmful.
Nowadays many and many more young adults/ teenagers have become familiar with companies that provide online financial services such as payments for online storefronts and direct payments along with post-purchase payments – without realizing that these instalments even if tempting, can be very dangerous because if the money are not paid back on time it will cause the users to stack up debt and a bad credit score.
If you don’t keep up with your credit card payments, your debt can quickly spiral out of hand. In fact, one of the dangers of accumulating credit cards debt could effectively cost you the chance to get a mortgage in the future.
These are only some of the important lessons that we believe children and teenager should learn when growing up, in order to develop healthy money habits and being comfortable with their financial decisions.