Children as young as three-years-old can understand basic money concepts. By setting a positive financial example and teaching good money habits early, parents can influence their children to lead healthy financial lives. Here are three money lessons to teach your kids.
Teach children the concept of delayed gratification and the benefits of waiting to buy something they really want. Avoiding an “open wallet” policy as a parent while encouraging financial discipline will help kids learn to budget and save for future wants and needs, instead of spending all their money on an impulse. Older children may benefit from seeing an online compound interest calculator to learn how their savings can grow over time.
Money is Finite
Teach children money is a finite resource and everything bought comes with an opportunity cost. In today’s world of swiping credit cards and using Apple Pay with the tap of a wrist, it can be less obvious to children where money really comes from. The old saying “money doesn’t grow on trees” still rings true – you must prioritize, plan, and save for the things you want to buy.
Teach children charitable giving to help cultivate a spirit of generosity and giving back to those in need. Parents and their children can decide as a family what cause or charity to support based on unique interests or specific community needs. In doing so, children will develop a greater social awareness and learn every little bit, no matter how small, can make a positive impact on the world and others less fortunate.
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