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6 Tips for Teaching Your Kids to Manage Money

6 Tips for Teaching Your Kids to Manage Money

Do you routinely teach your kids how to manage money? Better yet, have you been teaching your kids about money at all?

I’m not talking about simply teaching them vague principles like “save money” or “don’t spend everything you get”. I mean are you really teaching them the details about how to use their money wisely?

When they grow up and leave the house will they have a rock solid idea of how to take care of themselves financially so they don’t end up busted like so many people have over the last few years?

Managing money has gotten so much more difficult over the last 40-50 years because many more people are dealing with multiple debts such as car loans, credit cards, home equity loans, personal loans, and others. But when it comes down to it, the time tested basic principles still apply. When you teach your children to manage their money like their great grandparents did, life will be much simpler and they'll be much more likely to prosper financially when they get to adulthood.

Of course what you teach should always grow with the child and be age appropriate. Here are some simple guidelines for teaching kids about money that will always serve to steer them in the right direction:

  • Money Has to be Earned- Teach them that money doesn’t just appear from mom and dad. They should learn that receiving money is the result of diligent work and expectations that have been met. When they realize that money is not just a given, then you’re teaching them how the world really works. When they enter the working world on their own they'll know how to work hard and meet expectations without feeling entitled.
  • Teach Them That Debt is Unwise- When you borrow money you lose, period. Borrowing always costs more than using cash. When you teach your kids that consumer debt, car payments, and credit cards are things they should avoid using when they get to be adults, you set them up for long term success. I never, ever lend money to my kids. They have finally stopped asking.
  • Teach Them How to Budget- As kids get a little older (around 9-10 years old), teach them to have a plan for their money. When they get money, have them to write down a very simple plan that includes how much they will save, how much they will give, and a list of what they will spend their money on. Doing a budget, no matter how small and simple it is, will teach them to plan their spending ahead of time instead of letting the money slip through their little fingers, wondering where all of it went. Most parents could stand to do this one too.
  • Teach Them How to Give- Giving is great because it helps to eliminate selfishness. When a child is able to give away part of something she has earned, it empowers her and allows her to develop a healthy view of the world that helps her realize “it’s not all about me”. Your child will be using the resources she has to develop her own spirit and to make the world a better place. I recommend tithing on every dollar earned as a minimum level of giving, along with other contributions in addition to tithing.
  • Teach Them How to Save- Teach your kids to get in the habit of saving part of every dollar that passes through their hands. I recommend a minimum of 15%. This helps them to get in the habit of not spending everything they get, which is a habit many of us adults should learn to develop as well.
  • Teach Them Whose Money it Really is- Everything we have comes from our creator, including money. When you teach your children that managing the money that God supplies to them in the right way, you ensure that God is going to bring blessings to that child for doing the right thing with what they’ve been given. God will always find ways to bless you for doing the right thing.

When you teach your kids to manage money wisely, it will always pay off in a big way when they get into their adult years. Learning good habits early in life always has a lasting effect (Like keeping them out of your basement when they are 30).

But you must realize, if you’re not using these same principles to manage your own finances, it’s probably going to be difficult to teach your kids wise money management too.

The best way to lead is always to lead by example. Whether you like it or not, your kids are always watching to see if what you say matches up with what you do.

So be a great leader, teach your kids well, and they will succeed with money and in life!

Resources:

Be Your Own Money Expert

The Miracle (or Curse) of Compound Interest

How Do You Start a Budget?

Are You Leaking Money?

"Dr. Jason Cabler is a Christian personal finance blogger, author, and speaker. He teaches how to get out of debt and live a debt free lifestyle through his Celebrating Financial Freedom blog and self study course . His new book "How to Budget- The Quick and Easy Guide to Making a Budget That Works" is now available ( more info here ). He can be reached for interviews or speaking engagements by email , and can be found on Twitter , Facebook , and Google + ."

Comments

 

Missperson said:

Great articles! I have learned a lot from it. Maybe the most important thing for you is to take it action. Come on :)

November 7, 2012 8:10 PM

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