Money – What Younger Kids Need to Know
What Your Children Know About Money Will Affect Every of Modern Life
Nov 11, 2009
Money is a wonderful thing. It does indeed make the world go round, or at least make living in the world just a little bit easier. Unemployment, medical issues, or even a stretch of time between jobs may cause a change of economic lifestyle. Times of living on less income or even a loss of income are commonplace in today's faltering economic times. For these and countless other reasons, children need to know how to mange money. It's never too early to begin teaching kids about financial planning, budgeting, and saving. Here are some simple ideas on how to teach kids about the basics of finance.
Children Need to Learn the Value of Money
Have a family meeting about money. Kids under the age of 10 don't really understand the value of it, but at this age they need to know that money is a vital part of the life of a family. It's time to share some cursory details of the family budget. They don't need to know all the details of the bills. What they do need to know is that those who work earn a wage and from that, money comes into the household. That amount is divided, some into savings, some to bills, some goes out to pay for things like food, gas, electric, mortgage, and clothing. Children need to see that all of these things must be paid for.
Turning Kids Into Money Wizards
Finances are important and managing money is vital. Children need to know that the ways in which money is managed will affect lifestyle, housing, employment opportunities, and even relationships. Teaching children to develop the necessary skills and habits of financial management will lead to financial prosperity. An allowance is a good way to let them see exactly what to do with their own money. A good rule of thumb is to give an allowance at regular intervals, with the understanding that 10% must be placed in savings, and 10% must be given away to charity. The rest of the allowance is left to spend at the child's discretion.
Teach Children to Save, Save, Save
Benjamin Franklin rightly said, "A penny saved is a penny earned." Saving is a vital part of what children must learn about money. Too many people today are living in debt or from paycheck to paycheck, which causes all sorts of unnecessary stress to families. Set up a piggy bank and place a bit of cash in this bank at regular intervals. Let the kids know that when the money placed in the piggy bank reaches a certain amount, the family will do something fun together. The website www.allowancemagic.com is a good place to get tips regarding allowances. Some parents may want to open a savings account for the children at the local bank.
Children at any age can be involved at least in part with the decisions made regarding how to spend discretionary income. Being a part of the decision making process helps kids to understand the true value of money. An appreciation of finances will help kids know how much things actually cost and teach them to take better care of those things. Kids also need to learn that there are limits on how much money is to be spent and that some purchases may need to be put off.
Of course, kids are all different in the degrees of their ability to understand or handle money. The most important thing is to talk to kids about this. The manner in which people manage finances will directly affect almost every aspect of modern life.
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