There’s no doubt that money plays a big role in our lives. And as parents, we want to make sure our kids are prepared to manage their finances in a healthy way. One of the best ways to do this is to start teaching them financial lessons from a young age. This will ensure they have a great foundation of knowledge about budgeting, saving and overall financial health.
Too often young adults enter the working world without being taught the healthy money habits provided below. The added expenses associated with adult life can lead many young adults into looking at debt relief and searching terms such as; consumer proposal v bankruptcy, credit counselling and more.
Of course, kids will learn money habits one way or another. But it’s better that you teach them yourself so they can develop healthy financial habits from the start.
Not sure where to begin? Here are 10 financial lessons you should teach your kids now:
1. The importance of saving.
First and foremost, it’s important to teach your kids the importance of saving. Explain to them that setting aside money each month is a key part of financial success. And help them choose a savings goal, whether it’s for a new toy, a future college fund or something else entirely.
2. The difference between needs and wants.
One of the most important financial lessons for kids is understanding the difference between needs and wants. Help them to understand that they don’t need everything they see advertised on TV or in stores. And teach them how to budget by allocating money for essential items first, like food and shelter, and then saving up for discretionary items.
3. The value of a dollar.
It’s also important to teach kids about the value of money. Explain to them that a dollar today is worth more than a dollar tomorrow, due to inflation. And help them understand how to make their money work for them by investing it in things like savings accounts and stocks.
4. The difference between debit and credit.
Another financial lesson your kids need to learn is the difference between debit and credit. Explain to them how a debit card is linked to their bank account and can be used to withdraw cash or make purchases. And teach them about credit cards, including how they can help build credit but also come with high interest rates if not used carefully.
5. The basics of budgeting.
One of the most essential financial skills your kids need to learn is budgeting. Help them understand how to track their income and expenses, and create a plan for spending and saving each month. This will teach them discipline and help them avoid financial problems down the road.
6. The importance of giving.
Another important financial lesson for kids is the importance of giving. Explain to them that it’s not just about spending money on themselves, but also about helping others. Whether it’s donating to charity or simply helping a friend in need, teaching your kids to be generous will help them develop a healthy attitude towards money.
7. The dangers of debt.
One financial lesson your kids definitely need to learn is the dangers of debt. Help them understand that borrowing money can be helpful in some situations, but it can also lead to financial problems if not used wisely. Teach them about different types of debt, like credit card debt and student loans, and how to avoid it if possible.
8. The basics of investing.
Investing is another financial skill your kids should learn. Help them understand how to grow their money by putting it into stocks, bonds and other investments. And explain the risks involved so they can make informed decisions about where to invest their money.
9. The importance of financial planning.
Last but not least, it’s important to teach your kids the importance of financial planning. Explain to them that setting goals and creating a plan is essential for financial success. Help them understand how to save for specific goals, like retirement or a down payment on a house, and why it’s important to start early.
10. The importance of financial literacy.
One final financial lesson your kids need to learn is the importance of financial literacy. Help them understand that being able to read and understand financial information is essential for making sound decisions about money. Whether it’s reading a bank statement or understanding a credit report, teaching your kids financial literacy will help them navigate the financial world successfully.
So there you have it, 10 healthy money habits you should teach your kids now. Start early and you’ll set them up for a bright financial future.