It’s never too early to learn how to handle your money. Imagine if your child were suddenly about to move out but never learned how to manage an income. The things kids need to now about finances are not that different than what adults need to know. However, it’s always better to think ahead and prepare your child for life away from the nest. Remember, these tips are pretty simple, so start early with your child and plan for the future.
Needs vs. Wants
This might be one of the more difficult concepts for younger people to grasp. There is a clear difference between using money for something you want versus something you need. A need would be something like food, water, the ability to travel, etc. A want is spending extra money on takeout or buying a four wheeler. Adolescents can especially benefit from this. Imaging having a small child that can somehow understand that getting a new game console is not a necessity. Parents, you’re welcome.
This is the single most universal and important skill for anyone at any age to use. Your kids needs to understand how to allocate money for specific things. This is huge when we look at needs versus wants. Budget for the needs and save for the wants.
Remember looking at the price tag while you were at the store with your parents? That price tag didn’t add up when you went to checkout. This is an important thing to bring up with your kids. Taxes, though not always welcomed, are necessary for universally used widgets of society. We drive on roads, play in parks, and are protected by our military. Our taxes pay for these things and our children need to know this.
If there’s one thing you take away from reading this, it’s the importance of explaining credit cards to your kids. They are borrowing money and they need to pay it back eventually. They need to understand this money isn’t free, and if they fail to pay back the debt, they will find themselves in trouble.