One of the most useful lessons that you can teach to your kids that will stand them in good stead throughout their lives is how to manage their money effectively. As a parent, it is your job to not only pass on this wisdom, but also to set a good example to them which is they can copy as they get older. Here, we are going to talk about just some of the best financial guidance which you can provide to your kids which will help them out in a big way. So, let’s start pinching those pennies!
The Difference Between Wants and Needs
The distinction between essentials and nonessentials is something which you can start to teach kids of a preschool age. To start off with, you can talk to them about the things that you need – shelter, food, medicine etc.
Everything else is surplus to this and can improve their lives in varying degrees. And within the category of ‘wants’, you can also teach kids about ones which are long-lasting and ones which are only based on impulse. The latter category is the one which can end up being the most damaging financially.
Dealing with Financial Hard Times
Even when things are going well, it is important that your kids don’t think that they can spend without any consequences. The ability to deal well with financial hard times is another highly important skill. First of all, you can teach them about building up a rainy day fund which they can dip into when times get tough. Next up, you can explain to them about rebudgeting and making cutbacks where needed.
You can also teach them about seeking help from experts such as getting skilled personal injury legal assistance. And you can also reinforce the fact that financial hard times can befall anyone and the fact that it is important to be prepared regardless.
We live in a world in which delayed gratification is not something which is not common mainly down to the internet and the financial market. But the importance of saving to buy something is a lesson which is worth passing down. You kids should be encouraged to question whether they need something now or whether they can wait to have it later. This way, they are less likely to get themselves into debt and financial difficulty.
How Money Works in the Real World
It is inevitable the children lack perspective when it comes to money. You can help them to gain some simply by taking them out on a regular basis to go shopping. Show them what different amounts can buy, but also make sure that they know that you can often buy exactly the same product for less just by looking a bit harder and shopping around.
The earlier that you start to pass on financial lessons to your kids, the more likely it is that they will carry these with them for life.