You find that most parents try to protect or shade their kids on matters concerning money. But studies have always found, time and again, that this only ends up worsening the situation that they are trying to prevent. There are some concepts about money that you must never try to shield your child from. If possible, in fact, you can try to start engaging them in these money concepts at an early age. This will, in turn, help them to know how money works and how to be responsible with it.
In situations where you, the parent, are having a difficult time keeping and managing your expenses, you may find it difficult giving your child advice on how to manage it. But you should never try to hide the situation from them. Let your kids know what money is about and how to manage it responsibly. Here are some vital money concepts that you need to try and let your kids know.
1. The concept of money
Most experts argue that most parents should try and introduce their children to the concept of money at an early age. Some say that as early as 8 years of age is right. Remember, money is an integral and vital part of our everyday lives. And the children need to know that from an early and understand its role. Let your kids know just how much money is important to get what they want in life. Mold their relationship with money at an early age.
2. Value of working for money
It is important to also let your kids know that they need to work for the money that they get. If they want something, they have to work for it. It’s quite simple, they should know that for them to get what they want, they should work for it, and get paid. So that they can buy their desired items. Teach them at an early age that that’s how the world works.
3. The importance of saving
You should also educate your kids on the importance of saving the extra money and also sharing. Kids are likely going to spend any money that they get, which is okay. But they should also know the importance of saving that money for future use. Teach them to not earn and spend everything in one go.
4. Differentiating between a need and a want
Children are likely going to be more financially responsible the moment they hit their teens. But it would cause any harm to start teaching them earlier on, the difference between what they feel they may want and the things they may actually need. Take clothes, for example, they are a need, right? But the brands on the clothes are a want.
5. How credit works
Don’t let your kids grow up seeing you pay for things with plastic every time you head to the store. Different lenders offer different types of credit, for instance Northcash offer short term loans to its clients. Try and explain to them early enough how credit works and the importance of making timely repayments on their credit. Let them know that a credit card is not free money or anything like that. Because very soon, they will have their own credit cards.
6. The benefits of investing
Introducing the investing money concept part to your kids at around the age of 10 or 12 is a good idea. It is important that they start to know, earlier on, that they can benefit from investing their money wisely.
7. The concept of net worth
When your kids finally get to be teenagers, you can introduce to them the concept of net worth. Let them know how they can balance their total assets against their total liabilities. This is where financial balancing begins.