Most people agree that we need to better educate our children about money.. Here are some simple ways to prepare your children to handle money responsibly.
1. Money is attracted to diligence. Give your kids a weekly allowance and assign basic chores as a requirement. If they don’t do them, take their allowance money away to pay a sibling or maid to do it for them. Teaches them we have to work for money and that it is not free.
2. When you want something, sometimes you have to wait. We all like instant gratification. But sooner kids learn how to delay gratification until they can afford to make a purchase, the less likely they will have credit problems.
3. You can’t afford to buy everything, so decide what’s most important. Teach kids there is only so much money to go around. They need to set goals so they know which purchases are really necessary.
4. When you save money, compound interest can make it grow. This is a magical concept for kids, and it’s a great way to get them to save. Teach them to set aside 10% of their allowance each week for investing in their financial freedom. That money is not for spending – it is for investing in their future!
5. Credit cards aren’t magical money machines! Unless you explain how credit cards work, kids assume there is an endless supply of money. Tell them debt, interest and the importance of paying off the balance every month.