10 Money Management Lessons To Teach Your Kids

The older we get, the more we realize how crucial financial skills are to surviving and navigating life. Too bad though, schools don’t seem to teach our children enough about money and how to manage it.

As a parent, teaching your kids critical financial lessons is a great way to prepare them for the life that’s ahead of them.

But where to begin, you ask?

These key money management lessons we have compiled should be an excellent place to start.

10 Money Management Lessons To Teach Your Kids - piggy bank and coins image

1. Money Does Not Grow On Trees

Financial literacy starts with the understanding that money is a finite resource. Your kids have to realize early on that money does not grow on trees or simply pop out of the ATM; it is a product of hard work, and banks are just establishments that keep them safe for you.

To get your point across, teach your kids how to earn their own money by paying them for doing extra chores around the house. When they’re older, encourage them to get part-time jobs. Not only will this give them a taste of how the real world operates, but it will also help them develop a better work ethic.

2. Wants vs. Needs

Sound financial decisions begin with distinguishing needs from wants. You don’t have to wait for your kids to get older to teach them what’s necessary and what isn’t.

Make your children understand that some expenses have to come first, while others can wait ‘til later or when you have extra money as they’re not essential to day to day living.

3. Delayed Gratification

They say good things come to those who wait. Delaying gratification, however, is something that even adults have a hard time coming to terms with.

Teach kids at an early age that they can’t have everything they want in an instant. Learning to save and prioritize before buying something can have a significant impact on how they handle their finances when they become adults. As parents, you have to reinforce the idea that waiting pays off especially if the goal is worth the wait.

4. Saving For The Rainy Days

Your kids are never too young to start saving. Encourage them to save not because they want to buy something but because the money might come in handy in the future. Instill in them the importance of pausing and weighing the costs before spending. This may be a difficult concept to grasp at first, but later on, it can develop into a habit that they can very much benefit from.

5. Spending Money Wisely

Train your children how to get the most value out of every dollar. Just because they can afford it does not mean they have to buy it. Teach them how to compare prices; explain to them the concept of holiday sales and discount coupons. Help them understand that, sometimes, it wiser to wait it out, especially when buying items that easily depreciate.

6. Living Within Their Means

Of course, you can’t effectively teach your kids the value of money without letting them manage their expenses. Giving them an allowance and making them budget it on their own will help them see how important it is to control their spending. In fact, blowing their allowance can be a good thing; it will teach them to be more conscious of their expenses, else they have to deal with the consequences.

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7. How Credit Works

If you want your children to grow up to be financially responsible adults, you have to give them a better understanding of credit and what it entails. They have to be aware of the dangers of debt and how borrowing money can come at a cost. While credit is not bad, one must be sure of his ability to pay or risk getting into trouble.

8. The Value of Investing

Teaching your children the value of investing will not only introduce to them to the idea of using money to make more money but also trigger them to make smarter financial decisions. More importantly, it will encourage them to take risks for the possibility of gaining much more.

9. Setting Financial Goals

Children are impulsive by nature, so it can be tricky for them to set priorities. However, just like adults, they can be capable of making sacrifices for something that they really want. Train your kids to set financial goals by pushing them to make plans for the money they earn or receive. Help them set realistic targets and encourage them to keep on saving until those targets are met.

10. Sharing and Giving Back

Giving is an essential aspect of financial management. Whether it’s for the church, the community, or family members, children, as young as they are, have to be acquainted with the value of sharing what they have to those who need it.

They say you can’t give what you don’t have. Well, in this particular case, you can’t teach what you don’t know. If you want to raise financially literate children who know how to value money, you have to learn as much as you can about it first and then set a good example. Nowadays, adults can’t just pull the old “do as I say” parenting style. Kids tend to follow what you do, not what you say.

About The Author Bio

Samantha Green is the Content Marketing Strategist for Busy Kid, the first and only chore and allowance platform where kids can earn, save, share, spend, and invest their allowance. A mom of two, she enjoys spending time with her kids and reading books to them.

Using Financial Fairy Tales to Teach Children About Money

Eighty percent of parents in the UK agree that early financial education translates to better money management in adulthood but feel that they are ill-equipped to teach their children themselves. Children are increasingly exposed to household finance complexities in an era where four out of 10 adults in England and Northern Ireland struggle with basic arithmetic and only 36% of those ages 18 to 34 understand common financial terms. Aside from the fact that many parents are struggling with finances themselves, finance counselor and researcher Martha Henn McCormick notes that the relationship between early financial education and financial savvy in adulthood has not been thoroughly studied.

Using Financial Fairy Tales to Teach Children About Money - kids books image

Photo by Robyn Budlender on Unsplash

The gap in knowledge is a serious concern, according to the English Department of Education, and the All Party Parliamentary Group on Financial Education for Young People (APPG) agrees. An APPG report in 2016 states that the financial literacy crisis is reflected in the UK’s adult population and that there is a need for schools to teach financial skills to reverse this trend. The people over at gkandpartners.com can provide some help in this regard, but curricula do need to be changed to include more financial learning. Research done by finance firm M&G encourages financial education at home as well and suggests parents should be the first to teach their children about money.

Financial Literacy Crisis

With children aged 11 to 17 now exposed to financial issues that they cannot understand or solve, the Department of Education is worried that the financial literacy crisis in the country will get worse. Representatives of the department feel that parents need to be more proactive in their children’s education and that financial education must start as early as age two. While it is still not compulsory for students to take up coursework on finance, it is not enough. The APPG reports that the debt to income ratio of 17 to 24 year olds in the UK is now at 70%, indicating a lack of financial education among the youth.

The Power of Bedtime Stories

Children love stories and parents should take advantage of this by including financial fairy tales during story time. The right stories can teach children about the basics of commerce, the value of money, and the importance of savings and investments. This is a good start for ages 2 to 11 because it is a fun approach to teaching financial knowledge that will come in handy in adulthood. Bedtime stories can also teach children how to grow their wealth and keep their expenses lower than their pocket money. There are a number of financial fairy tales that tackle money wasters, budgeting, and fundamental investment concepts that can give them insight on how to handle the money they have.

The Magic Magpie, a financial fairy tale about a girl who wants to get rich quick offers lessons on financial decisions and their consequences. The Toll Bridge is another good bedtime story for parents struggling to teach their children about money. The book teaches children about taxes, supply and demand, and trade and public spending. The Last Gold Coin is also a good option because it tackles issues on scarcity and what people can do to save the day. You can find out more about the Financial Fairy Tales books here

Knowledge is Power

A child’s brain is like a sponge, according to the International Journal of Science. This means that he or she will be able to master the fundamentals of money management if it is taught early on. Teaching your child about finances through financial fairy tales would later translate to financial literacy in adulthood and can save your child from the burden of financial troubles.

How Stories Can Prepare Children for Life

Image via Flickr  Mankind has always been obsessed with storytelling, since the most distant days of prehistory when our ancestors sat around roaring bonfires telling the tales of mythical figures and their deeds.  Nothing has changed in this regard today, and fictional entertainment is as popular as ever, whether in the form of books, or TV shows and films.  One of the areas where stories continue to have the most impact, however, is in delighting and educating our children. Fables and fairytales seem uniquely able to inspire and enlighten kids, where dry lectures would put them to sleep.  Why is that the case? Let’s take a look.   Stories exist in a world of adventure   The normal world is often reasonably boring for grownups, never mind for children who’re used to living in a world of adventure and make-believe, where heroes and villains and strange creatures lurk in every corner and great quests define the fate of the world.  Stories are able to place often mundane concepts and lessons into fantastic settings and so make them far more interesting and exciting. That, of course, means that a child is far more likely to absorb the fundamental messages.   Stories make things less frightening  Real-world concepts and their implications are often scary, or at least daunting. Trying to teach a child about the dynamics of heroes and villains by talking about contemporary terrorist atrocities is likely to give them nightmares.  When placed in a fantasy setting, however, many of these concepts stop being so frightening. They’re now removed from our day-to-day lives by a degree of separation, and there are always wise kings or bold heroes to step up and do battle when needed.   Stories can simplify complicated concepts  In day-to-day life, almost everything has layers of complexity which can be utterly baffling if we’re not prepared for them. Few adults could claim to have a good working knowledge of how the various financial institutions operate, even the activities of benign companies such as best.creditcard. So how can children be expected to unravel these arcane mysteries?  Addressing big concepts in a fantasy setting allows for these ideas to be boiled down and simplified to their core components, while also positioning them against a narrative backdrop which serves to enhance understanding, rather than diminish it.  There’s a reason why metaphors are such commonly used teaching mechanisms.  Stories stick in a child’s memory  A dry lecture about something complicated like budgeting or arithmetic is likely to interest a child about as much as watching paint dry, and will probably fly out of their head as soon as they’re free to run off and imagine themselves fighting a dragon or saving a princess.  Stories with engaging characters and plots can carry these same morals, but present them to a child in a coating of fun and adventure. This, of course, means that the child is more likely to remember the tale. Even if they’re not constantly reflecting on the lesson of the story, it’ll be working in the back of their mind. - giant storybook image

Image via Flickr

Mankind has always been obsessed with storytelling, since the most distant days of prehistory when our ancestors sat around roaring bonfires telling the tales of mythical figures and their deeds.

Nothing has changed in this regard today, and fictional entertainment is as popular as ever, whether in the form of books, or TV shows and films.

One of the areas where stories continue to have the most impact, however, is in delighting and educating our children. Fables and fairytales seem uniquely able to inspire and enlighten kids, where dry lectures would put them to sleep.

Why is that the case? Let’s take a look.

Stories exist in a world of adventure

The normal world is often reasonably boring for grownups, never mind for children who’re used to living in a world of adventure and make-believe, where heroes and villains and strange creatures lurk in every corner and great quests define the fate of the world.

Stories are able to place often mundane concepts and lessons into fantastic settings and so make them far more interesting and exciting. That, of course, means that a child is far more likely to absorb the fundamental messages.

Stories make things less frightening

Real-world concepts and their implications are often scary, or at least daunting. Trying to teach a child about the dynamics of heroes and villains by talking about contemporary terrorist atrocities is likely to give them nightmares.

When placed in a fantasy setting, however, many of these concepts stop being so frightening. They’re now removed from our day-to-day lives by a degree of separation, and there are always wise kings or bold heroes to step up and do battle when needed.

Stories can simplify complicated concepts

In day-to-day life, almost everything has layers of complexity which can be utterly baffling if we’re not prepared for them. Few adults could claim to have a good working knowledge of how the various financial institutions operate, even the activities of benign companies such as best.creditcard. So how can children be expected to unravel these arcane mysteries?

Addressing big concepts in a fantasy setting allows for these ideas to be boiled down and simplified to their core components, while also positioning them against a narrative backdrop which serves to enhance understanding, rather than diminish it.

There’s a reason why metaphors are such commonly used teaching mechanisms.

Stories stick in a child’s memory

A dry lecture about something complicated like budgeting or arithmetic is likely to interest a child about as much as watching paint dry, and will probably fly out of their head as soon as they’re free to run off and imagine themselves fighting a dragon or saving a princess.

Stories with engaging characters and plots can carry these same morals, but present them to a child in a coating of fun and adventure. This, of course, means that the child is more likely to remember the tale. Even if they’re not constantly reflecting on the lesson of the story, it’ll be working in the back of their mind.

Teaching Your Children The Importance of Financial Self-Control

Money is an incredibly important part of life. Children don’t understand it unless you try to explain what it means and how it will affect their lives unless you start early. Many children grow up without this talk or gift of knowledge and then make bad choices in life. In the beginning to them, it will seem like fancy pieces of paper that have pictures on but somehow rule the world. It’s quite bizarre if you think about it, but the concept is such that how the world revolves has meaning and value to it. One of the best lessons you can teach your children about money is self-control. This might delve into what it means to live within your means and how patience is truly a virtue in the financial world. However, it’s the duty of every parent to give their children a healthy dose of reality and teach them the importance of discipline with money.

 admin@wiserpet.com Teaching Your Children The Importance of Financial Self-Control - child with money image

Photo source – Steven Depalo

Being financially independent

In the world of capitalism, you’re not truly independent until you have enough money and ways of accumulating money so that you’re not reliant on another person. Teach your children that just because you have money, doesn’t mean you should be spending it on luxuries. Gaming consoles, junk food and clothes are all unnecessary but might make them feel better. Essentially these things are short term and don’t provide them with the basics of a good living standard. Their priorities in life should be what they’ve always been for human beings. Those are, having a roof over your head, warmth and nutritious food to eat. Aside from cars, grooming habits, and following fashion trends, becoming financially independent is about responsibility and spending your hard earned money on sustaining a living standard.

 admin@wiserpet.com Teaching Your Children The Importance of Financial Self-Control - burden of debt image

Image by – Rilsonav

Getting yourself out of trouble

Teaching your children about responsibility regarding finances is one thing, but it’s very important to teach them not to give up. Life is complicated, and sometimes personal finances just get out of control. However, where there is a will, there is a way. Sources such as repair.credit, show how one may be able to repair their credit if it were to go down the drain. The process of repairing your credit score is going to be laborious, but with a meticulous approach, ratings can be salvaged. Speaking to financial advisors at your bank or perhaps even reaching out to the citizen’s advice in your country is a solid strategy to find the help you need. This will no doubt involve going through hardship, such as saving money, and reducing a living standard if needs be. It might involve, moving to a smaller apartment, selling a car and replacing it with public transport, and finding a second job. If you toughen them up to the realities of irresponsibility early on, they will be mindful of avoiding such pitfalls when they’re older.

Self-control goes hand in hand with liberation. Instilling a sense of action and reaction regarding finances in your children will teach them to be mindful of how they spend their money. There’s always a way of getting out of trouble and improving your credit score, but it requires discipline and consistency.

Traditional Fables And Their Money Lessons

Traditional Fables And Their Money Lessons - story book image

https://pixabay.com/en/book-story-fairy-tale-2341083/

There are lots of fairy tales and fables that can teach children about how they should lead their lives. Even classic Disney films are filled with lessons that children can pick up on. Most of these tales teach children how to deal with difficult decisions and social situations. But there are also some that can teach kids the importance of looking after their money. Here are just a few of them.

The Boy With The Nuts

One day, a young boy finds an open jar that is filled with lots of different nuts. He plunges his hand inside and grabs as many nuts as he possibly can. He then tries to pull his hand out of the jar but finds that it gets stuck. His hand, when filled with all the nuts, is too large to come out of the opening. A passing man sees what is happening and tells the boy that he would be able to get his hand out if he were satisfied with less.

What can kids learn from this tale? The main lesson is that it’s perfectly fine to think big, but you shouldn’t try and grab everything at once. This can apply to your financial goals. Rather than focusing on one large end goal, you should set yourself smaller, more achievable targets.

The Old Miser

Once upon a time, there lived an old miser who sells all of his possessions in exchange for one lump of gold. To keep his gold safe, he buries it in his garden. Someone who works for the old miser sees him bury the gold and then, once the miser is asleep, he goes outside and digs it up. When the man wakes the next day, he finds that his gold has gone. When he complains to his neighbor, the neighbor says he shouldn’t be so upset as he didn’t do anything useful with the gold.

The main lesson to take from this is that it’s important to put your money to good use. Otherwise, you might end up with a bad credit rating and could end up becoming financially dependent on installment loans for people with bad credit or other types of financing. Whenever you have any spare money, you need to save it in a high-interest savings account so that it grows for you.

The Inattentive Deer

One day, a deer is feeding on the coast. She is worried that a farmer will come through the field and shoot her, so she feeds with her back to the sea so that she can keep an eye on the fields. However, while she is so focused on the fields, she doesn’t notice some fishermen come from the sea and throw their net over her.

From this fable, children can learn that it is important to stay focused on all of their future investments. Don’t overcompensate on one by only taking notice of that one. Otherwise, your others might suffer!

Fables and fairy tales are a lot more than just fun stories. Most have some very important financial lesson hidden within them!