What if we told you that the most valuable legacy you can pass on to your kids and grandkids isn’t an object or money, but education about effectively managing money? Teaching valuable money skills while kids are young puts them at an advantage when it comes time to create and live sustainable lifestyles as adults. Without it, any income or inheritance might as well be as good as gone!
It’s easy for young people to grasp the basics of how money in exchange for goods and services works through simple activities like the ones below. But be careful: it’s just as easy for them to pick up any bad money habits you have as well. These three “do as I do” lessons are a great starting point:
Money doesn’t grow on trees
Most transactions kids see happen with the swipe of a credit card. They need to understand that cards don’t represent unlimited funds, and spending more than you have creates debt. Try giving them $20 and send them to pick out snacks or to the beauty aisle. It will be a good opportunity to see their financial decision-making in action.
Needs vs. wants
Knowing the difference between things they want and things they need is an invaluable skill they’ll use forever. Try this: let your kids know your budget for your next shopping trip. As you choose items, explain which items are needs and wants, and separate them into two carts. You can quiz them at home by calling out commercials on screen to see if they can pick out needs vs. wants.
Most successful adults say they were taught to wait for things they wanted at a young age, which helps them avoid debt. Pick out an item or experience to save for as a family. Create a chart using the number of days and amount of money it’ll take to afford it. Cross off the days as they pass while adding up the accumulated funds. Factor in setbacks due to any impulse purchases along the way.
Introducing these three concepts is a great way to build healthy money management habits. Visit our website for more money management resources, and of course, reach out if you need our help as you begin to help your kids establish these long-term financial skills.