If there’s anything school didn’t prepare us for as kids, it’s the big bad MONEY world. 🐺💰
Savings? Budgeting? Investing?
Bills…Taxes…Credit…The list goes on.
Some of us are years into our ‘adulthood’ and STILL don’t know what any of that is. 🤷♀️ And no, we’re not here to shame you if you’re struggling either. #wegotchu
You were probably taught to have good exam scores, not, credit scores. So as parents, aunts and uncles or older person, we should stop sending our youths into the world without some knowledge of how money works.
Why you should teach your kids…
It’s never too early for kids to develop good financial habits and smart money management. In fact, teaching children the fundamentals of earning and saving, and how to deal with money, could be super helpful to them in the long run in their adulthood.
You knowww, the basics like how to budget, spend and save. Stuff you’re practicing with your finances now.
Since they learn from observing you in your daily life *no pressure*, what better way than to start at home. Teach kids the value and appreciation of money from an early age – how to do this and when to do this, why do this. ⚖️
7 things kids should know about money
1. The concept of money
Money is a helpful tool that makes it easier to get what we need and want, now or later. 🛠
This can be taught through play. Role-playing scenarios where they pretend to buy something is a great way of letting them learn about the value of money, how much things cost, how money works and counting!
2. Working for money
Unfortunately kids, unlike Santa, money doesn’t ✨magically✨ appear. It must be earned. 😭
Practice giving paid jobs for the extra hard chores (like annual spring cleaning, or during festive seasons). As they get a little older, encourage them to make money outside by looking after the neighbour’s pets or selling their arts and crafts!
3. The importance of saving and sharing
If kids have money, they’re probably going to spend ALL of it ; tell them that it’s not OK to spend all of their money at once, everytime. This is where the value of saving and sharing comes in.
You can help them learn this by teaching them the 20-10-70 rule:
Save 20% – this will teach them to always pay themselves first.
Give 10% – this teaches them the value of sharing and giving to others who are less fortunate or to causes they care about.
Spend 70% – this teaches them to spend less than they earn, which is the core of personal finance.
4. The difference between needs and wants
Teens have a hard time distinguishing true needs from actual wants.
For example :
- Clothes are a need, but branded items are a want.
- Food is a need, but fast food or pizza is a want.
- A phone is a need, the latest iPhone is a want.
To help teens learn the difference, let them do their own shopping! 🛍
Set a budget and create a list of items they need to buy. Give them a shopping allowance and let them make the decisions when it comes to limited resources and unlimited options.
5. How credit works
Just as your kids notice you’re using money to buy things, they’re also wondering why you’re paying with ‘plastic’.
Break it down that whenever you use a credit card or get a loan, the bank ‘gives’ money for the purchase; and will send a bill showing how much you owe. If you don’t pay all of it, interest adds up over time, so you end up paying more than the actual cost of the item you bought.
“Spend only what you can afford to pay off each month ah, don’t end up in debt.”
6. The benefits of investing
Between the ages of 8 and 12, concept of investing can be introduced. It is important they know that the money you make can make even more money, if you invest it wisely.
The earlier you start investing, the more time you give your money to grow! Parents and children can open an investment account together using some of the kids’ money.
7. The concept of net worth
In a nutshell, it’s the difference between what is owned (assets) and what is owed (liabilities). Kids need to understand net worth as a measure of financial health.
We all want our kids to be financially stable and understand the value of the money they will be earning. Once they understand and see the benefits and rewards it brings, they will know how to work with it.
Financial stability is something almost all adults strive for. So let’s help our youths today. Start them young!
We tested out if kids understood Delayed Gratification.