We all know that money is important to living a happy and healthy life, but the sad truth is that we don’t learn financial lessons as often, or as quickly as we should during our youth. Instead, most of us find ourselves struggling to understand things like debt, investments, and loans when we’re much older, and worried about the big purchases we need to make in life.
If you want to give your youngsters a better chance of success as they head out into the financial world, then you could consider teaching them a few basic money lessons while they’re still young enough to make a difference. Here, we’ll look at just some of the most important cash lessons everyone should know.
1. Making Money Can Cost Money
Today, the phrase “it takes money to make money” is even more relevant to younger investors in the marketplace, than it is to their parents. Very few teenagers today will get equity stakes and stock options when they enter a new company.
Teaching your child this lesson doesn’t necessarily mean convincing them to invest whenever possible, but it does mean showing them the hard work that goes into making an income. For instance, if they want to make enough money to purchase a game, they might need to spend money on an outfit for a job interview first.
2. Goals are Always Helpful
When you’re trying to make your money work for you – at any stage of life – it’s useful to have a plan in place. Teaching your children how to decide what they want to achieve in terms of financial goals, and then asking them to plan a strategy to achieve their ambitions is a great way to make sure that they’re prepared for the challenges that lay ahead in life.
Not only will teaching your kids about goals help them to understand the value of money better, but it could also help them to develop their problem-solving skills too!
3. Working Hard Makes a Difference
Ultimately, there are factors that can control the amount you earn. You might struggle to find a job that pays anything higher than minimum wage – regardless of whether you have a fancy degree or not. But that doesn’t mean that you shouldn’t teach your children the value of working hard. After all, putting in the extra effort can lead to bonuses, promotions, and more.
Start small when teaching your kids about the value of working hard. For instance, you could give them pocket money in exchange for them completing chores around the house, then encourage them to get a small job like a paper round.
4. Spending Money Has Consequences
When your child starts to earn money, either in the form of pocket money or through a small job, it’s important to make sure that you don’t bail them out every time they get into trouble. Ultimately, your child needs to learn that they should never spend 100% of their income as soon as they get it. If your youngster goes out and spends all his cash on things he doesn’t need, then finds he doesn’t have enough money to hang out with his friends later in the month, don’t offer to give him the cash.
It’s hard to be strict about things like this – particularly when you want to reward your child for his work ethic, but remember that eventually, they’ll learn the value of saving money back for things that they might want later.
5. You Can’t Always Get What You Want Immediately
Finally, this is a hard lesson for people to learn at any age, but it’s one of the most important financial teachings out there. Ultimately, no matter how much you want something, you might not have the cash to buy it straight away. While adults can get personal loans and other financial assistance to help them with bigger buys, this doesn’t mean that you should teach your child that they can rely on loans for everything they want in life.
Instead, give your child a chance to learn that they’re going to need to make some careful choices with their money in the future. If they want to buy something big that isn’t an absolute essential, then they might need to spend a few months saving before they get the prize they want. The ability to delay gratification when it comes to spending can be an important life lesson.