What Can You Teach Your Children about Money

Effective personal financial management is one of the important goals in life. It is prudent to develop a positive attitude and cultivate good habits for your children while they are still young.

 1. The habit of savings: Give your children a coin box each and teach them the good habit of depositing coins into the box and over time when the box is full, a sizable amount is accumulated. An important lesson here is that when you save consistently and continuously every day, you will be able to build a substantial amount.

 2. Open a savings account: When your children are bigger, take them to the bank and open savings accounts for them. The lesson for your children to learn here is that, apart from the good habit of savings, they will earn interest and compound interest when they keep their money in a bank. The money is also safe.

 3. Monthly allowance: It is a good habit to give your children a fixed allowance at the beginning of every month. It is a good way to teach them to do budgeting and setting aside an amount each month to save and not to spend all. They should learn not to spend more than what they have budgeted for each day of the month.

 4. Save for what they want: When they want a big-ticket item they have to learn and save a portion every month until the amount is enough to buy the item in cash. This is a good habit because when they are working they know it is the best method to buy an expensive item instead of borrowing money or using a credit card and incur interest.

 5. About inflation and interest: It is also important to inform them that It is costing more and more to buy the same items as time goes by and the interest earned from the money you keep in the bank is not enough to cover the rising cost of living. The alternative is to invest and grow your money.

 6. The importance of growing your money: it is necessary to educate your children that investments, such as stocks, bonds, and mutual funds are for the long term. It is to beat inflation and to save for their retirement and their children’s education.

 7. About debt: A very essential aspect of money is debt. It is vital to teaching your children not to incur debt to buy things because debt attracts interest. When it is not properly managed, a person can be bankrupt. Teach your children to be disciplined and buy things with cash only.


 What are the other things that you can teach your children about money?

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