Whilst you might think it is more important to teach children to cope with different life situations, it is even more important to teach them financial concepts, to ensure they are financially perceptive when they are adults.
How you handle your own money can have an effect on how your children view their own money throughout their adult life. Giving your children the gift of financial sense is high on any parents priority list.
Helping a child see money as a friend, one that can help and support him through life, rather than an enemy that is always on the look-out to destroy you. You can teach them the skills that will last a lifetime, the choice you make can affect their lives. Being unable to understand how to live within a budget can have a disastrous effect on young adults trying to support themselves.
What to teach children
It is important to teach them the positive tool they will have control of; they will want to make decisions that makes their money work harder. It is possible to bring up a generation, who don’t see credit as a right, but as a tie that can ruin your life.
- Teach children to live within the money they earn, not to spend more money than they have coming into the home each month.
- Teach children the meaning of borrowing money; in terms of how much more you have to pay back.
- Teach children the meaning of an overdraft; it is still a loan from your bank and using it means interest charges, although this depends on your bank account.
- Having the latest gadgets and accessories doesn’t mean that you are rich. It could mean that you have no true understanding of credit and you are in debt, more than you could possibly ever afford to pay back.
- Teaching your children control and power over money rather than money having the power over you. If you give too much freedom to money it can quickly go, being strict with money can mean having money for some luxuries in life.
It is important that you try to teach your child the basic information they are going to need for understanding some of the more technical terms in the financial market. As children we teach them to read, to work hard and to earn money. We don’t seem to teach our children the best way to use the money and how to avoid getting into debt with high interest payments. Many parents struggle. It is a subject that they themselves find difficult, as they haven’t been informed how to manage their own money.
Therefore, education is the key to the future generations understanding how to use their money wisely and what it means to save money for the items that you want and need. Understanding some of the basic financial terms can save money and are fundamental to understanding how best to use your money.