What did your parents teach you about money? Managing their finances is one of the most important life skills that we can impart to our children. There are four main areas of money that children need to learn. Special thanks to Dave Ramsey for these important tips.
1. Work. Money does not grow on trees. It comes from work. Money doesn’t come from our parents, other people, the government, or hitting the lottery. Our kids need to feel an emotional connection between work and money, and this can start when they are young. Allowances are good, but a system of commissions is much better. If they do the “work” you assign, ie, their chores, they get paid. If they don’t work; they don’t get paid. It’s true for parents—it should be true for kids. Why not teach them this lesson early on in their lives?
2. Save. We are a debt driven society. Most Americans live at 110% of their income. This means that too many of us are accumulating new credit card debt every month. We should teach our children early on how to save up for purchases. If they learn how (and why) to save up for a Barbie or video game today, they’ll know how (and why) to save up for a car or house tomorrow—with little or no debt.
3. Spend. Make sure you let them have some fun with their money and experience the incredible feeling of buying something they want with money they have saved. If they keep it all in the piggy bank and we never let them enjoy it, they’ll either grow up into miserable old misers or they’ll rebel and become crazy, debt-ridden spenders as soon as they are out on their own.
4. Give. Giving is the most fun you can have with your money. Nothing beats the feeling of generosity- making a waitress’s day with a $100 tip out of the blue or learning to tithe at a young age. Let’s make sure our kids are giving their own money as they start to earn it. If I hand Junior a quarter to drop in the offering plate on Sunday morning, he’s just a courier for my money. He needs to know the joy of giving out of his own pocket. How great would it be if taught our kids to give 10%, save 10%, and learn to live on 80%? By helping our children develop this habit early on, it becomes an important part of their life.
Learning these four areas—especially giving—brings your kids a depth of confidence and character they’ll never have otherwise.
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