Smart Parents Teach Their Kids These 6 Things About Money

One of our main jobs as a parent is to impart enough knowledge and wisdom to our children so they can not only survive in the world but thrive as well. Of course, in modern society, this means educating them on money and finances as well. A topic you can read more about below.

Spending more than you have is always a bad idea.

While our whole society seems to be built on the idea of borrowing money to pay for things that we could not afford to buy outright, educating your kids that spending more than you have on a consistent basis is a bad idea is crucial. This is because if you don’t, not only does it mean that they will get used to a lifestyle that is way beyond their means, but it also sets them on the slippery slope towards unmanageable debt.

Of course, this makes it an essential lesson that you kids need to learn about money. Luckily, it is possible to instill this wisdom in them from an early age by providing them with an allowance, and then encouraging them to save at least a portion of this each month.

Also, you may wish to encourage children to work and save for items they want, as opposed to buying everything for them. The reason being that this can also help them to get into the habit of raising the money before they spend it.  

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Installing a good work ethic in your kids early on can be a game changer.

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The is usually a way out of a financial jam no matter how tight it is.

Another valuable lesson that you need to impart to your kids is that there is nearly always a way out of a financial jam, no matter how serious it is. For example, there are many debt relief agencies out there that can help consolidate debts, something that means it’s much easier to pay them off at a reasonable price each month, which is knowledge that it is essential for your kids to know about, but not plan to rely on.  

Alternatively, there are also loans were someone else vouches for you and promises to cover the debt if you default. This can be hugely helpful if someone is in a financial fix, but their credit is poor. Of course, you will also need to remind your kids to shop around for the best apr guarantor loans and other financial products as well, as some will offer a lower interest rate and other benefits. Something that can make all the difference when it comes to being able to pay them back, and so could help your children have a better quality of life as well as get out of financial trouble if the need arises.

Saving is good, but investing is better.

Parents also need to emphasize the importance of not just saving money, but also investing it as well. In fact, it is hugely important to teach your kids about investing because no other action can allow them to increase their net worth in such a drastic way.

 

Sadly, even now the investment market has become much more accessible to the everyday person because of apps, and low management fees, few people realize the long-term benefits of this activity. Therefore It’s crucial to make your kids not only aware of all the investment options that are available to them including property, cryptocurrency, and futures but also educate them on how these platforms work.

Also don’t forget that as a rule investment is a cumulative process, and that means the sooner your children can begin on this path, the easier their financial future will be. Therefore be sure to explain and emphasizes the value of investing during their mid to late teens so they can get a jump on the competition.

Money doesn’t make you happy, but it can help.

It is also hugely important that as a parent you help your children to understand that money in and of itself isn’t what makes people happy. In fact, it’s the lifestyles, health care, and reduced stress that those with good finances enjoy that is the key.

What this means is that it’s crucial to delineated the quest for becoming rich and yet not spending any of this in ways that enrich life, and doing the opposite. Therefore, be sure to listen to your children’s opinion on what they want to do in their lives, in term of their career, and their goals, as well as who they want to be and adapt your financial education to this.

After all, just recommending that all you kids go into high paying finance positions is a one size fits all solution that is unlikely to work for most people. In fact, at worst it can land your kids in a career that is unfulfiling, even cause them to resent you for pushing them in that direction in the first place.

Monitoring spending is a task that needs to be done regularly.

It’s likely that as a patient you will make an effort to teach your kids that they need to wash up after they have cooked and eaten a meal and that the need to change their socks and underwear each day. However, it can be all too easy to forget to teach them that monitoring what has been spent each day should be a regular task as well.

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In fact, by establishing this as a part of their daily routine, you give your kids the tools to much better monitor what is happening with their finances. This can help them make improved buying decisions, avoiding impulse buys, and stay out of debt. All things that mean this small daily task can have a considerable effect on their financial well-being through the entirety of their life.

Finances don’t have to be confusing.

Lastly, it’s incredibly important that you teach your kids that correctly managing their money and budgeting doesn’t have to be complicated or confusing. In fact, sometimes the simple systems can work much better not only because they are clearer to follow and stick to, but also because they make dealing with financial matters a lot less intimidating. Thus making this final lesson one that is also crucial to impart to your children.

 

A Few Benefits of Teaching Your Children about Finance at an Early Age

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Teaching their kids about financial management and financial concepts isn’t really a priority for many parents. In fact, it often doesn’t figure in any meaningful way at all, beyond perhaps issuing an allowance and giving the child a piggy bank to proudly store their savings in.

Of course, The Financial Fairy Tales are based around the premise that there is real value in introducing your children to the world of finance at a young age, while also acknowledging that the best way to teach children is frequently through metaphor and story, such as by weaving financial messages into a fairytale structure that everyone can understand on an intuitive level.

Unfortunately, however, some people believe that teaching their children about finances will have a detrimental on them in some way or another. Perhaps by making them more cynical, greedy, or less imaginative.

Here are a just a few benefits of teaching your children about finance at a young age, to offset any such potential concerns.

It can open their eyes to financial opportunities down the line

There are a lot of ways in which someone can make their fortune through interacting with the world of finance, but the vast majority of these avenues remain closed to those who haven’t been trained to spot them, and who aren’t armed with the confidence and basic know-how required to get involved.

Forex trading is one of the most potentially lucrative and rewarding financial fields to get involved in, but it requires a good degree of confidence and financial understanding to participate in fruitfully.

Getting your child comfortable with financial thinking, and getting them to consider the financial dimensions of things from an early age, can increase the odds that they will be able to successfully navigate realms such as Forex one day, with the help of tools such as those found at FX-List.

It can help them to avoid developing a fear or dislike of financial thinking

Many people have a somewhat pathological fear, or dislike, of financial thinking or financial management, well into adulthood. This often stems both from a sense of insecurity and also from a sense that there is something inherently uncouth or threatening about dealing with financial topics.

Yet whatever we do in life, financial considerations must be given their due. By getting your child comfortable with financial thinking at an early age, you help to ensure that they practice better money-management down the line, and are more responsible in their financial dealings.

It can help them to develop an entrepreneurial mindset from an early age

Children tend to be naturally enthusiastic about the world, and if something is presented to them as a game or a challenge, they will typically be keen to get involved.

When your child is introduced to financial concepts at an early age, it is more likely that they will seek to apply those concepts. In the short term, this may start as “investing” pocket money. Over time, however, it can develop into a genuine entrepreneurial streak, of the sort that can transform their destinies for the better.

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.

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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. 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.

Spending Habits That Your Kids Must Never Pick Up

Children are easily influenced during their early years. This is mainly because they don’t know better and they draw inspiration from the things around them. They’ll look at their parents and friends to learn how they should interact with the world, and it’s important that you instil good habits into your children from an early age.

With technological advances and the internet being more open and accessible, spending habits are a major concern among children. There are many horror stories of children spending thousands on smartphone and tablet games and apps because they don’t know better. It doesn’t help that apps now make it easy for you to make multiple back-to-back purchases and there’s virtually no protection unless you enable the child locks. Even then, it’s easy to make mistakes and your children need to be protected from these types of bad spending habits. To help you out, we’ve put together some useful advice that will help you teach your children better spending habits.

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Teach your children about finances as early as possible

You could run some games or exercises with your children that teach them about money and debt. It might be a difficult concept for them to understand, but with a bit of teaching and patience, it’s possible to teach kids good financial habits from an early age. However, this does mean that you need to be firm and vigilant with how you spend on them.

No more spoiling

Don’t use your kids as an excuse to make large purchases because this will only spoil them. Many parents don’t realize that spoiling your children is a quick way to teach them poor financial habits. It doesn’t matter if it’s sweets, a soft toy or the latest electronic gadgets–you need to be firm with them and stop them from coercing you into buying them extra things. Instead, encourage spending on meaningful things such as extracurricular activities, classroom equipment or extra study material. Teach your kids the difference between good and bad spending and you’ll be surprised at how mature they can be at a young age.

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Taking money too lightly

If possible, teach your children early on about what it takes to make money. Whether it’s applying for loans online or digging into your bank account with the auto-saved details, your children may start to take money lightly because they can see how easily you obtain it. While getting an online loan can be positive and beneficial, it’s still important to teach your children that money is not easy to obtain and it doesn’t grow on trees. It takes a lot of dedication and hard work to obtain and it’s important they understand this at an early age.

Some final words

As mentioned at the beginning, children are easy to influence. What you teach them at an early age will stick with them forever, so instil some good financial habits into them from an early age and balance how you spoil them so that it doesn’t become the norm.

How To Set A Good Example Of Handling Money For Your Children

Becoming a parent is one of the most rewarding experiences in life. However, the pressure to set your children up for the best start in adult life can seem like a monumental task. Teaching your child to cook, do their own laundry, and clean the bathroom all takes time. However, the most strenuous of lessons can be handling money. Money stress has the ability to keep you up at night, and can even be the main reason for relationship problems and family feuds – something everyone wants to protect their children from. Below are a few ways you can best educate your child on dealing with money and give them their best chance in life.

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Teach Your Child The Time Value Of Money

Earning pocket money is a given in many households with young children, however helping them to understand the time value of the money they receive may not be. Everyday life really does revolve around money. The tap turns on because your water bill is paid, and you get up every morning for work to ensure you have the money in order to pay that bill. Simply sitting down with your child, whilst playing a game of shop, to explain why the cashier is at work every day can help your child to comprehend the process of money, and why they have to earn it through doing chores.

Allow Your Child To Gain Experience Purchasing

Depending on the age of your child, you may think it is too early to allow them to go up to the counter themselves and purchase the fidget spinner they wanted so badly. However, giving them the experience of asking a shop assistant for help and advice on a purchase could start to build a good foundation for their spending habits. Encouraging your child to really think about and research their purchases to ensure they are getting the best price available, and highest quality. Just like you would seek advice on investments and pensions from wealth management services – you can educate your child on seeking advice on their purchases – no matter how small they may be.  This will help to set in a place a healthy and intelligent habit that will continue into their adult life.

Teach Them About Waste

Opening your child’s eyes to food waste and the cost of breakages could help them to understand the value – and the privilege – of money a little better. Accidents, of course, happen, and even more so when you have children. However, you can help your child to be more careful by explaining to them that what they have broken cost money, which is now having to be thrown away. It’s the same process with food. The rule “no sweets before dinner” is important to reduce the amount of food wasted in your household – explain that food also costs money and throwing it away is not only a waste of food but money too.

Hopefully, this has given you a few ideas on how best to prepare your children for their independent, working life. It is never too early to start instilling good habits, and they will certainly thank you for it later on in life.