Teaching Children Good Money Sense.

Children learn from a young age and some of the best lessons come from their parents and role models. Children remember every time they tag along to the shops, every time you make an online purchase, and every time they see their parents stress or fight over money

With this in mind, what are the best lessons you can pass on to children?

Remember that consistency is key. So is openness. Children absorb what they see, hear and feel. This affects their values, attitudes and behaviour towards everything, including money. Therefore, your reaction to money will affect them, too.

What to teach your children?

There are four basics that need to be covered:

– Earn
– Spend
– Save
– Borrow

Earn

Money does not grow on trees. Sound familiar? It should! One of the most important things for children to understand is that money is not an entitlement. In order to pay for things, you need money and that money is earned as an exchange for products, services, time, or just hard work.

Working for your money offers a sense of gratification , pride and accomplishment. Give children tasks and chores that they must perform on a weekly or monthly basis in order to earn their pocket money.

Essentially the child learns the value of exchange.

Once there is money available, children now need to learn how to Spend, Save and Borrow.

Save

Rainy days come along all too often. Children should be taught that the more you save, the more you will have available when emergencies come along. By having extra cash available, the need for loans lessens. Teach your children that a percentage of their pocket money must be placed in a piggy bank.

Spend

When you take out a loan, you always need to repay the loan, generally with some sort of interest.. Children need to understand that if they need money NOW and don’t have the time to save for it, then they can loan the amount under a contractual agreement, which they would pay back over an agreed term, with interest.

Borrow

When you take out a loan, you always need to repay the loan, generally with some sort of penalty for convenience. Children need to understand that if they need money NOW and don’t have the time to save for it, then they can loan the amount under a contractual agreement, which they would pay back over an agreed term, with interest.

These very basic lessons can teach children about the value of money, (in a safe environment) and they can experience how having and no having money affects them.