Teaching Children About Money
One of the things we fail to do is teach our children about money. Is it any wonder then that when many grow into adults they find it difficult to manage their personal finances or that the accounting records of so many businesses are in a state of confusion. We teach our children about everything else but when it comes to money we have taught them that “money is the root of all evil”.
If we are to develop a society where people are financially responsible we must start to teach our children about how to earn and manage money. The earlier a child learns about money is the better they will become at not only earning it but also managing it.
Some of the things we must teach them are:
- We must teach our children to become entrepreneurs and so determine their income levels by the amount of work they put in and their own creativity.
- Let them understand the value of money – what money can do for their lives and the time value of money concept.
- Teach them the difference between an asset and a liability, and consumption versus income earning expenditure.
- Budgeting – it is important for children to understand the importance of budgeting and that you cannot succeed if you spend more than you earn.
- Savings – teach them to pay themselves first before embarking on any discretionary spending. It is important to make savings interesting for them.
- Investing – children should learn the concepts of portfolio management and about investments. For example, they should be taught that an investment is something that earns future income so a car would not be an investment but an expense. Teach them about the concept of compounding.
If children are taught these and other tips about money management then they will be more comfortable later in life, and will be able to retire at an earlier age. This is what we all want for our children so why not teach them early what many of us didn’t learn until some hard knocks later in life.
Mindyuhbusiness.com offers expert advice, through the Ask the Expert, which can guide children and parents on the virtues of money management principles.
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