Money Saving Tips / Parenting / Wealth & Prosperity

Teaching your Children How to Manage Their Money – Part 1

"Teaching your Children How to Manage Their Money - Part 1"In this day and age, it has become too common for people to buy things now using credit, and to pay later. Just think of all the people you know who are deep in debt. You may even be one of them.

Credit cards were introduced to America in the 1950’s, and since then, they have resulted in a lot of financial problems for millions of people. It is estimated that over 40% of American families are spending more than they earn from their jobs.

So if adults are not doing such a good job of managing their money, how can we expect the children of tomorrow to manage theirs? Fortunately, there is still time to help your children out.

Teaching your children how to manage their money is something that should begin early, and can help prevent the debt that many adults find themselves in much too soon.

In what follows in this report, are tips and advice to help teach your children the value of money, and how to earn it and use it. Only then, can they grow into responsible adults with an appreciation of what money is, and how to use it wisely. Then when they move away from home, you can rest assured that you have taught them what they need to know about money. Just remember that you, the adult, also need to practice what you preach. After all, your children see what you do, and act accordingly. Therefore, it is important to understand that you will be modeling money management skills.

So what is one of the first things you need to teach your children about money?

That would be the difference between a “want” and a “need.”

You can begin explaining this as early as when your children are preschoolers. The amount of detail discussed will vary and change depending on the ages of your children.

A “want” is something that you would like to have, but you do not need it to live. For example, you might want a video game, but it is not necessary in order to live.

A “need,” on the other hand, is something that without it, you cannot survive. For example, you need food, water, shelter, and clothing. 

To make things a bit more confusing, the two terms sometimes overlap. Therefore, you need to explain this to your children as well. For example, although you need clothing, you do not need brand-name labels. That, instead, is a want. The same thing applies to junk food. You need healthy foods, but you do not need junk food. Again, that is also a want.

As they learn to manage their money as they get older, you can teach them that it is okay to have some wants, but that they need to balance it with their needs and true financial situation.

What are some ways that you can teach your children the difference between a “want” and a “need?”

·         When you are shopping with your children, ask them the question, “Is this a want or a need?” Then get them to explain why they made that choice. Discuss it in further detail.

·         When you are paying your bills, ask them which ones are “wants” and which ones are “needs.” For example, a water bill is a “need.” Without it, you have no water to drink, cook with, bathe in, or do your laundry. On the other hand, a cable bill is definitely a “want.”

In PART TWO WE will discuss the 5 Money Saving Strategies to Teach Your Children

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