Honey, if there’s one thing I’ve learned from my years studying finance, it’s this: money doesn’t grow on trees. I know, I know, total buzzkill, but that’s what I tell my own sprouts (ages ranging from 10 to 20).
If I want to prepare them for a world that involves coupons, 401ks, and mysteriously disappearing paychecks, I need to give them the right tools. So, grab yourself a cup of joe, and let’s dive into the 8 lessons I’m teaching my kiddos about money.
Here are the 8 lessons I’m teaching my kids about money, with application steps for each one:
1. The Art of Budgeting
The first rule of the money club? Know where your money is going! That’s why I’m teaching my kids about budgeting. Budgeting is simply balancing your expenses with your income.
Application: Get your kids in on the action. Let them help with meal planning and grocery shopping. They’ll get a first-hand experience of making the dollars stretch. Teach them how to compare prices and why it might make sense to opt for generic brands sometimes. And hey, who knows? You might just get some unexpected help with dinner preparations!
2. Save Like a Squirrel
To quote my grandma, “Save for the rainy day, darlin’.” And squirrels for the winter! Our friends at Get Rich Slowly agree that starting to save as early as possible makes a huge difference in the long run.
Application: Start a savings challenge with your kids. It could be saving for a desired toy or game, a charitable cause they feel passionate about, or even a family vacation. The goal is to teach them the value of setting aside a part of their money for future use.
3. Understanding Needs vs. Wants
Is that latest iPhone a necessity? Or that Prada bag? Teaching my kids the difference between needs and wants is crucial. The Minimalists have some excellent insights on this.
Application: When your child insists on buying something, engage them in a conversation about whether it’s a ‘need’ or a ‘want.’ Is it something they can’t do without, or is it a momentary craving spurred by clever advertising or peer pressure? Help them to understand that satisfying all ‘wants’ instantly can leave little room for ‘needs.’
4. Compound Interest is Your Friend
My kids’ eyes glaze over when I mention the words ‘compound interest.’ But folks, it’s the magic potion of finance! A little saved today can mean a lot tomorrow.
Application: How about a visual demonstration? Use a jar of marshmallows or their favorite candy. Start with a small amount and demonstrate how it grows over time if they ‘add’ to it regularly (and resist eating it). It might not be an exact financial model, but it makes the concept of ‘growing your money’ a whole lot more digestible!
5. Credit is Not Free Money
It’s essential for my little birds to understand that credit cards are not a free pass to spendville. Credit is a tool and needs to be used responsibly.
Application: An excellent way to illustrate this is to give your kids a small ‘credit limit’ for chores or tasks. Explain how they can ‘borrow’ against future tasks but also how ‘interest’ can add up if they don’t ‘repay’ promptly by doing the agreed-upon chores.
6. Negotiation Skills
From flea markets to salary raises, negotiation is a valuable life skill. My kids need to know that it’s not just okay but encouraged to ask for better deals.
Application: Allow your kids the opportunity to negotiate their chores or curfews. It’s a safe space for them to practice negotiation, and it gives them a better understanding of compromise and dialogue. Just don’t be too surprised when they start getting good at it!
7. Money Doesn’t Equal Happiness
As much as I love a good sale, money and things don’t equate to happiness. Living a life full of meaningful relationships and experiences is what truly matters.
Application: Make it a family tradition to have ‘experience gifts’ for birthdays or holidays instead of material presents. A trip to the amusement park, a cooking lesson, or a camping trip could be much more memorable than another toy or gadget.
Giving back to our community and helping others is the cherry on top of the sundae of life. My kids need to understand that sharing wealth is just as important as saving it.
Application: Involve your children in charitable activities. It could be as simple as donating toys they no longer use, helping out at a local soup kitchen, or running a lemonade stand to raise money for a cause they care about. It’s all about teaching them that giving can be just as fulfilling, if not more so, than receiving.
Remember, it’s all about making finance accessible and relatable. As they say, the journey of a thousand miles begins with a single penny… or was it a step? Either way, you’re on the right path!
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