Understandably, most parents feel uneasy about teaching their kids about money. Parents may have been taught that talking about money is unbecoming, may be afraid of what their kids may reveal at the playground, or may not be confident about their own financial skills. As a result, they may simply assume their children will somehow find out what they need to now.
The good news is that you can adopt a two-pronged approach of both telling and showing your children what they need to know about earning, saving, budgeting and debt. You can begin this as soon as they understand that money is exchanged for things, a concept they learn as early as kindergarten.
Below are some basics you need to teach them.
· The difference between haves and wants: Ads on TV, magazines, and billboards provide a good chance to talk about a basic financial concept, telling between what one needs and what one wants. Once your kids begin to understand this concept at a very early age, use family time to talk about the things you all want versus the things you need.
· Debt: This might a concept you teach to your kids as they get older. Let them know that debt is a last result and should only be obtained as a last result – for things they really need. By learning this early, they can as adults avoid getting themselves in huge debt such that they would need the assistance of debt consolidation companies.
· Dividing their money: Your kids only see you spending money. They don’t see you earning, budgeting, paying bills, saving, or giving to charity. Find fun, interesting and easy ways of introducing them these concepts to them. That way, they know that for each dollar they receive, they should plan on which part of the dollar goes where, rather than spending it impulsively.
· Hunting for bargains: When your kids are old enough to add and subtract, take them on an occasional trip to the grocery store to scavenge for bargains. Give a child a short grocery list that adds up to about $20. List a reasonable non-sale price – e.g. $3 for one gallon of milk – beside each item. Then challenge her to find the items at a price under the one specified on the list, and let them keep the savings. This way, they learn to distinguish value and price.