Useful Lesson About Money

Many good lessons in life are learned as a child. Reading, writing, arithmetic are on the list that a child should learn, and personal finance isn’t included.

As an adult, you know that money is a part of your daily life. You use money to buy things that you and your family need and want, such as foods, paying rents or mortgage, clothes, taking vacation, or paying for any health care you and your children take. Teaching your kids about how to use money wisely and budgeting and making sound fiscal decisions are important and helpful in their future life.

You can start talking about money with your children as early as age 3. When you take them to the store and buy something, you can explain to them that you earn money so that you can buy things you want. You can also show them that while you are handing money to the sales (or to the machine sometimes), you’ll get something in return.

From toddlerhood through adulthood, you can show and teach them about the value of money and how to use it in their everyday life. Since using money will involves many skills such as saving, making choices, setting priorities, delaying gratification, sharing, interacting with others, and some math skills, it is much important for you to teach them whatever they want depending on his age and experience.

For example, you can give your children some pocket money to let them buy something on their own, and tell them what they can do with this money. Or you can also pick a day (a birthday, for example) to give your child an annual raise, so as to increase her responsibilities as you increase her allowance.

When your children is getting between 11 and 14 years old, you can start talking about long term goals, such as saving for college or a car. You may consider opening a saving account for your children and work with them to make deposits and keep track of savings as they grow.

Saving is an important part of learning how to manage money. It’s about telling your children to learn about how to plan, develop patience, and learn how to delay gratification to get what they want. For example, when you give your child an allowance, tell them that they can save some or all of the money, and decide when (once a month or so, for example) the saved money can be spent on something special.

Investments are also an important part in managing the money. Teach them about the correlation between risk and reward. Let your children know that risk can lead to large losses, and tell them about investing risk tolerance, and careful assessment of the risk. Show your children the way that they can use to search investments and come to decisions about those investments. Some good choices would be companies that your children are familiar with, such as Disney, or a favorite restaurant. Point out stories on the chosen investments and discuss impacts on the performance of the investments.

You can also tell them they can find a part-time job to get their own earnings when they are 16 to 18 years old. At this time, you can let your children to make investments all by themselves. When your child enters college, you can give him or her a credit card, and discuss with him or her how to use it responsibly. Determine together what expenses you will pay for and what he or she must pay for. If you want the card only be used in emergencies, make that clear.

Teaching your children about money can benefit them in both short and long term. Let your children help you determine how to teach them, rather than deciding all by yourself. Earning money, savings, and investments are all parts of financial planning. You should teach them all.

Family Law