In school, kids are taught reading, writing, math, history, literature, science and everything else that will prepare them for their future. What they don’t always learn enough about is money.
Young children learn by observing their parents. They see mom or dad pull out their bank card or credit card to pay for things. And they can begin to believe that those little pieces of plastic are the source for getting whatever they want, whenever they want, without making the connection that it isn’t an inexhaustible resource and that hard work had to go into earning it.
The risk is that they may begin to acquire the same impulse that many adults have. That is, seeing something they want and requiring the immediate gratification of obtaining it right away which can lead to the eventual need as an adult to reduce your debt burden.
So what are some money lessons for kids you can begin teaching them at a young age?
Probably the best tool in a parent’s arsenal is the use of an allowance to teach their children early about smart ways to manage their money.
Lesson One: There Isn’t an Unlimited Supply of Money
We all know that our bank accounts only have a limited amount of funds at any given time and that every time we take money from the ATM, that balance goes down. Young children may not understand that concept. They just see that you put your card in, and money comes out.
The best way to teach them that money is earned and that there is only a finite amount of it is to give them a regular allowance for the completion of chores. But the most critical part of the lesson (and often a very difficult one) is not to give him if the child wants something but has already spent his or her allowance.
Lesson Two: Delaying Gratification
Another valuable lesson for children to learn is how to delay gratification. If children learn at a young age that something worth having is something worth waiting for, they can begin to learn the patience needed to make purchases only when they can afford to pay for them.
So, if there is a special toy that they want to have but don’t have enough money to pay for it, they will learn to save up for it.
Another valuable lesson that comes hand-in-hand with this is that they will inevitably see something else in the meantime that they might want to buy. This will place them in a position where they must prioritize and decide which is most important to them.
Lesson Three: Keeping Track Of Their Money
You can make one of the conditions of receiving an allowance the requirement that they keep track of how much money they have and where they spent it. Not only will this help them as they try to save, but it will also make them conscious of their spending habits: a trait that will serve them well into adulthood.
If you’re looking for some additional money lessons for kids, check out threejars.com. It’s an online system that helps parents and kids manage their allowance by putting a portion into a virtual save jar, a spend jar and a share jar to also teach them the value of giving.