Children do not always get practical lessons about money and finance at school. This is why you need to take that part of your child’s education into your own hands. You should start early and introduce new concepts gradually. The following are six important lessons about money you should teach your kids.
Money Is Not Free
The first lesson is that money is not free. Children might think money magically appears from wallets or automatic teller machines. You want to use a variety of lessons to show that money has to be earned in some way. Try not to make a habit of giving children free money for no reason to reinforce the point.
Saving Money Is Necessary
The next lesson should be that saving money is necessary. You want to stress concepts like delayed gratification and not spending money when you first get it. Stressing the point that saving money is necessary to meet financial goals will make your child more responsible.
Tracking and Budgeting
You want to start teaching kids about tracking and budgeting money as they get older. Teach your kids to keep track of what money they have and what could be coming in. You also want to show your children how to make a basic budget with expected expenses and financial goals. When they get older, consider opening a bank account for them to better understand this learn how to budget getter.
Owning Valuable Assets or Property Is Important
Teach your children that owning valuable assets or property like a house is important. You want to explain equity in simple terms. You can use examples about how owning property makes it possible to get a loan from a hard money lender. For example, Ellis Equity hard money lenders in Houston, TX make it easy for property owners to withdraw equity out of their land. This will provide a good basis for more advanced financial concepts.
What Credit and Loans Are
The next step for older children is a lesson about what credit is. This is important since some education will allow your kids to avoid mistakes in college. You should also go over borrowing, loans and interest so that you child has a fundamental understanding of how the financial world works.
How to Handle Debt and Bills
A final lesson should go over how to handle debt and bills. You can use household bills as examples. Teach your kids to always pay on time and to never take on debts that cannot be repaid in a timely manner. Explain how not paying bills can affect credit.
Do not delay teaching your kids about money. You want the lessons you give to be firmly ingrained in the minds of your kids so they are always aware of what is going on. Early financial education ensures your children will act responsibly with money.