As an adult, you already know that even though the economy is in recovery there is still plenty of debt out there, even if you have your finances in order. One of the most important ways to teach your children about money is to talk to them about it, and make sure you mention the state of the world when it comes to money.
You may think that your child is too young to talk to about money and that it’s something to save for teenagers. However, as soon as you child is old enough to form a complete sentence you can start talking to them about money. The earlier the better, actually.
They Need To Understand How Money Works
There are all different “types” of money, from cash to credit cards, and even savings. You want to teach your kids about all of them. They need to understand that money is something needed on a daily basis, for food and clothing, and to pay the bills to keep the lights on and the house heated.
That means that you need to show them what utility bills look like, and what it’s like to shop for groceries and spend money that you worked hard to earn on them. You need to explain to them that you have to work to make money in order to live. You also need to teach them that credit cards are not free money and must be paid off in a timely manner, or they could end up with a huge debt and more money to pay because of interest rates.
Teach Them About Debt
Your children need to know what debt means and what it can do to them. Talk to them about this often, as they age. A reminder to teens about all of the money talks you’ve had over the years is a must to remind them once they are at an age where they’ll have their own income and start getting their own credit cards.
Debt can ruin a person’s chance to buy a home, or even rent an apartment. Debt can make it impossible to get a job even, depending on what field you want to go into. Debt can happen from bills, credit cards, and even getting a college education.
That means that just as important as it is to talk to kids about money itself, they also need to learn about the importance of getting a good paying job and holding onto it. That means a college education and a plan.
Have fun with little ones when it comes to learning about money. Play grocery store or banker with them. As your kids get older and start getting an allowance teach them about taxes and have them start a savings account. They’ll thank you in the future.