How often have you heard friends or acquaintances bemoan the fact they were never taught the true value of money by their parents? Perhaps it’s you who shares this regret for the lack of parental money lessons. There are also related discussions about how schools need to improve upon, or emphasize, money lessons throughout their curriculum.
In the absence of lessons concerning the value of money, it often takes many years (if it happens at all) before people begin to learn from their money mistakes. A large portion of our population can be considered financially illiterate.
To afford your children the advantages of understanding money, we present three money lessons that should be staples in any financial discussions with your children. These discussions have the potential to teach good money habits for life.
Three Money Lessons to Teach Your Children
Spend Within One’s Means
Steve Schaffer, CEO of Offers.com, shared a personal experience which helped his child understand what living within his means is all about.
Schaffer and his wife allow their children to spend their allowance as they like. However, the children are not allowed to spend beyond their budget. One son had saved enough for an iPhone. Before his son went to buy it, Schaffer simply asked how he was going to afford the monthly phone charges.
His son never accounted for these charges. As parents, a great money lesson is to teach children that initial cost is one thing, recurring cost is another. Living within one’s means incorporates initial monetary outlay and future charges.
Needs vs. Wants
A young mind may struggle with differentiating between a need and a want. Children may want something so badly that they assume it is a need. This money lesson often takes time and numerous examples before it takes hold. Once established, this lesson can help children make better money decisions, as well as, understanding corollary money lessons such as delayed gratification, emotional purchases, and impulse buying.
Money Doesn’t Grow on Trees
To kids, money is the thing that gets them what they want. But where exactly does this magic green paper come from? It comes from working. In most instances, when you work, you get paid for that work. To help reinforce this concept, parents may choose to allow their children the chance to earn an allowance. Another way to reinforce this concept is to bring your children to your workplace for an hour or two, or to incorporate a discussion of the work parent(s) performed during the day (a great mealtime topic).
What do You Want Most for Your Children
Happiness? Purpose? Love? A passion? Responsibility? Civic-mindedness? When you as a parent are asked, “What would you like most for your child’s life?” these are some of the typical answers.
You are not likely to hear: Being financially secure later in life. This is because we, as Americans, have a strange relationship with money. However, financial security often enhances the chances, or eases the burden, of typical goals of parents’ wishes for their children.
Don’t allow your children to ever wish you had instilled in them money lessons.