With cell phones, television, makeup, and cultural pressure, children as young as elementary school are learning certain realities of the world. As kids grow and develop, it is important that they are equipped with the resources they need to navigate life successfully.
One important area of maturity that children do not typically understand is money. Many students that leave for college are not prepared to financially manage life in the “real world.” It’s important that parents teach their children about managing finances adequately. In this article, we will share four important lessons that your kids need to learn about money.
1. Money Does Not Determine Self-Worth
Many teens struggle because they compare themselves to others. They are jealous of their friends’ clothing items, cars, or houses. When children do not have as much “stuff” as their friends, they often feel insecure and embarrassed.
Throughout life, it is important to affirm your child, telling them that their self-worth is not based on material things. Much more than material belongings, it is important to invest in character.
2. Actions Have Consequences
As the brain develops during teenage years, many kids do not fully understand that their actions have consequences. As your teen begins to manage their own personal finances, it is important that they learn that there are consequences to irresponsible actions.
What happens if they spend all of their allowance on fast food? There is no more money to spend frivolously for the rest of the month. What happens if they get a speeding ticket?
Their car insurance costs rise and they may have to take a driving course. There are a number of educational resources about fiscal responsibility that can help you have this discussion with your children and teens.
3. Wants Vs. Needs
In the brain of a child, many desires seem urgent. As your young one begins to learn about finances, help them decipher the difference between wants and needs. What are the items that they want to purchase?
What items do they need in their day to day life? As your student gains the ability to determine the wants and needs that they have, they will begin to prioritize their spending habits.
A budget is extremely difficult for adults to maintain. For that reason, try teaching your children the value of budgeting from a young age. Each month, determine an appropriate allowance to grant your child. With that money, help them think through the potential things they want to purchase throughout the coming weeks.
Do they want to go get ice cream with their friend? Is there a new shirt that they want to purchase? Do they want to donate to a nearby charity? After a child determines the things that they want to spend money on over the course of a month, they can work to stick to their designated budget.
Fiscal responsibility is difficult, even for adults. Since the nuances surrounding money are so complicated, it is important that you teach your children how to manage funds from a young age. By doing this, you will prepare them to handle more complicated financial situations in the future.