Schools may well teach your children how to add and subtract, but learning the value of money is one lesson that has to come from home. Unless you teach them otherwise, they will continue to think that money grows on trees and that banks just give away cash – until they have to make their own way in the world. While financially indulging your children might feel like kindness at the time, you could be doing them a grave disservice by not teaching them valuable lessons for life. Here are a few ideas on how to teach youngsters the value of money.
1. Children are not born understanding how paid employment and banks work. Explain these things to them simply as soon as they are old enough to understand.
2. Help your children to distinguish between needs and wants.
3. Teach your children the principles of spending and saving money as well as those of making money grow.
4. As soon as they are old enough, give them an allowance of their own to permit them to put principles into practice and learn from their own mistakes.
5. Open an interest-bearing account for your children so that they can watch their money grow.
6. Put aside an allowance for essentials such as clothes to help teach your children how to budget and save for more expensive items.
7. Explain how credit cards and loans work; otherwise your children could grow up thinking that these are “free” money.