Your children being 5, 15, or 25 wouldn’t better – learning about money is a lifelong process, and the lessons they learn early on will affect the lessons they learn later in life. While it’s never too late to start learning about how to handle finances, some lessons, like the ones that form one’s attitude and beliefs about money, are more important than others. Here are five your child of any age should know.
- Losing money is a part of life. Everyone loses money, perhaps children more often than adults, but financial loses happen. Your child may drop twenty dollars from a pocket at the mall, misplace a school fundraiser envelope, or have their lunch money stolen. How you react to the situation will affect how your child views money for the rest of his or her life. If your child acted irresponsibly and contributed to the loss, it’s important to help him or her take responsibility for their actions. However, you should talk with your child and explain that mistakes are part of the learning process, and formulate ideas to help prevent losses in the future. Punishment for losing money is usually not necessary, but the child may be given extra responsibilities to help recover the lost funds. Extra chores, after-school jobs, and community services may all be viable options for helping your child take responsibility for the loss.
- You don’t have to keep all money that comes your way. One of the best ways to foster a healthy attitude toward money is to encourage your child to give to others. Whether you set up a structured system, such as tithing, or if you keep a special find for giving to others in need when the opportunity arises, it’s important to teach your child about giving early on.
- Spending is to be expected. Especially when children begin to be aware of money, you can expect a long list of wants and needs to ensue. Help your child learn to narrow their shopping list to include items that will enrich their life. You can set aside a very small fund for small toys and consumables (like candy, stickers, art supplies), but the majority of your child’s spending money should go towards items that are higher quality and will be used and enjoyed for a long period of time.
- Saving is essential. You should stress that saving is not an option, but essential even if your child decides to save just one dollar a month. Your child doesn’t have to save a large portion of their money, but he or she should set back something from every monetary source. Birthday and Christmas gifts of money or allowances should be examined and a portion allocated for saving.
- Well-managed money is the goal. When learning about finances, your child may get caught up in the excitement of saving, spending, and investing, but your job as a parent is to help him or her stay focused on the main goal – to manage their money well. Even if investments don’t perform well, wise money management is a rewarding process for children when a parent supports them.
It’s never too early to begin saving for college, investing for future expenses, and learning to spend responsibly. Money earned and saved little by little fosters a healthy, responsible attitude for life. What money lessons do you think are essential for children?
Btw, there's a pretty nifty tool that motivates your kids to do chores. It's called MyJobChart.com. With a free account, they can earn points for finishing jobs you assign them, good towards free merchandise. Give it a try. It's completely free!