Financial knowledge is a must for kids growing up in this century. It is necessary to teach your kids basic concepts about money from an early age. Sufficient knowledge of finance will help your kid shape his future in the best way. You can start giving your kid lessons on handling money before he hits adolescence.
Kids nowadays pick up things fast. They are able to grasp the importance of matters easily. Every kid must know the value of money first. Basic concepts of finance like saving, planning and budgeting are vital lessons. It is important for kids to understand the difference between need and want. They must learn to be wise in his spending. Keeping track of money spent is a crucial lesson every kid must know.Read More: 11 Side Effects of Splurging On Your Child
The important money concepts are:
7 Money Concepts Every Kid Should Know
Value of money
The first thing every kid must know is the proper value of money. It is important for kids to understand money does not come easily. It has to be earned by hard work. It is a limited resource. Tell him no when he demands for something. Make him understand money is limited and should be properly used. Only then will a kid respect his own hard earned money in future. Otherwise, he will spend extravagantly without a thought. Every parent should teach this basic lesson to their kids from early on.
Difference between need and want
Study says children of even 3 years are able to grasp money concepts. It is therefore necessary to teach kids what is need and want. Avoid fulfilling his wishes immediately. Delaying his demands will teach him to wait. This will make him aware that he doesn’t need everything he wants. A child should know this crucial difference. This will teach him to choose when to spend and when not. For a child, what he wants is what he needs. It is the duty of parents to tell him otherwise. This will make the child distinguish between need and want. He can save money by not spending on whatever he wants. It will make him financially sensible from early age.
This is one of the major money concepts every kid must know. The sooner your kid understands this, the better his future. Saving money is very crucial to maintain a healthy lifestyle. Every kid must know that saving will compound his money in future. Let your kid save his pocket money in piggybank. Saving will become a habit as a result. This way he will learn how to handle finance in a controlled way. Saving money ensures a better future. Spending money extravagantly leads to financial ruin. The sooner kids know this, the better for their future. Once your kid learns this he will handle his finances in future effortlessly.
Planning finances is another concept kids should know. Making a budget is something children should be taught early. Parents need to teach their kids the importance of being organized. Kids should have their own budget to work with. A fixed sum of money should be given to kids. They can be taught to save and spend from that budget. This lesson will make your kids future ready. Working without a budget will make him confused in future. Planning and budgeting are necessary for financial stability. Kids need to learn this from childhood. The sooner they learn the better.
Keeping track of money spent
This is a necessary lesson for every kid. Parents should always encourage their kids to follow this. It is a vital money concept. One must keep a track of money spent daily. This helps in a proper financial planning. It also ensures financial stability. Parents must teach this concept to kids early on. This is a practice that will reap rewards for your kid in future. Keeping track of his expenditure will allow him to adjust his budget accordingly. He will also be able to maintain a balance of savings and expenditure. This is necessary for maintaining financial stability.
Borrowing money is a harmful tendency. It can directly lead to financial ruin. Every kid must know about this important lesson. Parents should make their kids aware of the dangers of debts. Do not encourage him to borrow money even form you. If your kid does not understand the harm of debts, he will tend to borrow money as he grows up. He will have debts to take care of temporary financial crisis. Debts always lead to ruin. It is something which should be avoided. Parents need to make their kids aware of this very early.
The modern world we live in is dependent on technology. Money is handled mostly through technology. It is all about cards and ATM. This generation of kids must learn the importance of protecting vital information. Not sharing valuable data like bank details, pin codes with others is a necessary knowledge for kids. Teach your children not to share such information with anyone. This will make them conscious. It is an important lesson for their future. The future will be all about technology. When your kid grows up, he will benefit from this lesson. He will make sure not to share financial information with others.
Every parent teaches their children to be well mannered, kind and good. But they ignore to introduce lessons on the subject of money. In this age, financial lessons are probably the most important for every kid. All the parents should make an effort to teach their children the basic concepts of finance. Avoiding the talk of money will only affect their future.
When a kid learns about saving, spending, budgeting from early age it helps them in future. These important concepts shape their future. It makes them sensible regarding their finances. Financial stability is very important for a healthy lifestyle. The knowledge you give your kids in young age will stay with them forever. It will make handling money easier for them. They will learn to be disciplined and reasonable in financial matters. It is a skill that will ensure their future success.