We all want our children to succeed in life -- and that includes succeeding with finances. It's important that our children understand the value of a hard earned dollar, and learn how to manage their finances so that they can succeed with money. However, children don't just come up with these skills. It's up to you to teach your kids financial lessons that will help them later in life. Here are 10 financial lessons that your kids need to learn:
- Spend Only What You Have: This is the number one rule of personal finance. Teach your children that they should have the money to make purchases before buying something. Get them in the habit of living within their means.
- Save for the Future: You can help your child get in the habit of saving for the future right now. Teach your child to put money aside for college, retirement and other goals. In some cases, visuals and charts that can be colored in can help.
- Give to others: Part of well-rounded finances is helping others. Giving can be a great way for your child to learn to respect others, and to develop feelings of sympathy. Plus, it encourages them to better manage their money so that they can be generous.
- Money isn't free: Teach your kids that money isn't free. You need to work for it, or you need to come up with some other way of earning money. This can be done creatively as well. Earning money requires effort, whether it is mental exertion or physical exertion.
- Credit cards are loans: Many children don't "get" that credit cards are loans. Before you decide that your teen is ready for a credit card, you need to gauge his or her understanding of how credit cards work. Your children need to know that credit cards are loans; they are using money that isn't theirs, and it needs to be paid back.
- Good credit is important: While younger children may not understand this, teenagers can begin learning this important financial lesson. Teach your child the importance of good financial and good credit habits. A credit score is a very important part of everyone's finances.
- Investing can help build wealth: You want to teach your children that it is important to be earning interest, rather than paying it. Investing can be one way to earn interest. Teach your kids the basics of good investing principles, and how they can build wealth over time.
- Needs and wants are two different things: Children should understand the difference between needs and wants. Help them see that there are some things that need to be paid for, and other things that can wait. Wants can be cut from the budget.
- It's important to be patient: We can't have everything all at once. Teach your children to be patient as they work toward their financial goals. Encourage them to save up for short term goals, as well as long term goals. Not every impulse needs to be gratified instantly. This lesson works in other areas of life -- not just in finances.
- Everyone's finances are different: Your children should learn to measure success on their own terms. Everyone's finances are different, and everyone values different things. Teach your kids to look for their own version of financial success, and base their decisions on what's important to them. Trying to keep up with their peers, or make decisions based on what's important to others, will only lead to credit card debt and financial ruin.
Image source: Howard County Library System via Flickr
This post was included in A Homeschooling Carnival at Garden of Learning.