From an early age, it’s important to teach kids to value and appreciate money. How and when to do this is often the biggest question. But kids learn fast, and when they understand the benefits of hard work and saving, they learn even faster. So what do your kids really need to know about money? Here are the basics.
Here’s what your kids really need to know about money
The whole concept
Kids need to understand that money is a tool that makes it easier for us to get what we need and want in life. The value of it and how much things cost is one of the first things kids really need to know about money. Parents can teach this to their children by playing “shopping” games.
Why we work for money
It is important to teach your kids that money doesn’t grow on trees. It is earned and worked for. You can teach this to your kids by giving them certain paid-for chores. Once they’re a little older, encourage them to make more money by doing things like washing cars or caring for the neighbour’s pets.
The fine line between needs and wants
Kids have a hard time distinguishing between true needs and real wants. Clothes are a need, but brand names are a want. Food is a need, but the pizza is a want. You can teach your tweens the difference between needs and wants by allowing them to buy their own clothes. They’ll have to make difficult decisions with limited resources and unlimited options, but it’s a lesson worth teaching.
Your kids have noticed how you use money to buy things, but they might have noticed how you pay with plastic at times. Whenever you do that, teach your kids that the bank provides money for the purchase, but that you’ll get a bill for the amount you owe them soon. Tell them that if you don’t pay it all back at once, you are subject to interest on the remaining balance. Over time, that interest adds up, and you end up paying much more for the product that it cost on the shelf.
When your kids are between the ages of 8 and 12, introduce them to the concept of investments. You have to teach them about how the money you make can make even more money. If you invest it wisely, it can yield a rewarding return over time.