The Three Important Money Lessons Your Children Don’t Learn in School
In just a few weeks, children will return to school. History, reading, math, and other subjects will fill their days. However, very few lessons are taught related to financial matters. Therefore, it is up to parents to ensure their children learn these lessons at home.
Is It Too Early to Begin Teaching Your Child About Money?
Wise money management and financial planning skills can be learned very early. When a child learns how to manage money effectively early in life, he or she has a better chance of making good financial decisions as an adult. As parents, we should not assume that our children learn wise money management in school. We should teach by example, but we should also take proactive steps to ensure that our children have the financial skills necessary to succeed as adults.
Three Financial Lessons Every Child Should Learn
There are many financial lessons that you can teach your child. Three essential financial lessons that parents need to begin teaching their children as early as possible are:
Allowances are not a gift. Allowance should be earned and not given as a reward or for no other reason than the child wants money. It does not matter how young your child is when you begin giving him or her an allowance, you need to teach your child that money is not an entitlement, but it has to be earned through honest and diligent effort.
We are not advocating that you treat your child as a household employee. Chores should be age-appropriate and reasonable. Earning money, even at an early age, can install strong work ethics and values.
Allowances can be used to teach children that saving money and gifting are just as important as spending money. From an early age, parents should teach children to set aside a certain percentage of their allowance for saving and giving. The percentages can be set based on your personal preferences, but you want to be fair so that your child is encouraged to continue earning money instead of becoming discouraged because he or she never seems to have any money left over each week/month to spend.
Some parents require their children to “pay” bills from their allowance or deduct “taxes” from their allowance to help them learn about wise money management. However, this lesson may be better taught by including older children in your routine each month for paying bills. Older children can learn about personal and household budgets, spending choices, and the benefits of paying bills on time by helping you pay bills each month.
You can discuss how much it costs to have electricity, water, cell phones, cable television, internet, snacks, clothing, and other necessary and luxury items. You can explain interest rates and how long it takes to pay off loans and credit card accounts. You can also discuss savings, retirement, and other financial goals and how to reach those goals through smart financial planning.
Other Helpful Resources
Some helpful resources you may want to use when teaching your children about money management include:
Contact Castle Wealth Group to Discuss Your Financial Planning Goals
Castle Wealth Group can help you with a variety of financial planning matters, including tax planning, estate planning, long-term care planning (Medicaid planning), and retirement planning. We believe a key to financial success is learning as much as you can about money management, regardless of your age.
If you have questions or want additional information about our services, call (844) 885-4200 to speak with a knowledgeable representative.