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Like the fabled adage goes, the older we get, the wiser we become. For some reason however, many of us fail to acquire a good amount of financial knowledge, resulting in whimsical financial decisions that could lead to ruin. Now, more than ever, because of the economic downturn, it has become extremely important to be cognizant of our finances and impart sage advice to our future generations. With proper insight and forward thinking, our next generation will be able to live more financially sound and not repeat the same mistakes that unfortunately many of us have made.
As children grow older, they become more and more aware of money and how to get more of it. They set up lemonade stands, have garage sales, and when they’re of age, take jobs at local supermarkets or restaurants. Children also become more aware of the fact that in order to get the things they really want, such as the latest video game or the latest fashion, it is smart to save money and be a good shopper. This is something, however, that parents need to instill in their children from early on, so as to avoid not only spoiling their children, but to provide a good foundation for their financial future.
One word of advice for parents is to not give in too easily to their child’s demands. Setting a good example and teaching children that money does not come easily and you cannot always get what you want, when you want it, is important to creating a financially-responsible environment in the household. It is also a life lesson that if imparted at an early age, it can stick with the child when they grow older. Children need to be taught that creating and abiding by a budget truly works, especially in these difficult economic times. Kids also are aware of the current economic climate, and what better time than now to get started on teaching your kids some valuable financial lessons?
It is important also to let kids in on the financial discussions that take place in the household. As said previously, children are aware of the current down state of the economy, so parents shouldn’t skirt the issue with their kids; they should be upfront and honest about it. By doing this, children can understand why certain decisions are being made, why the family has been cutting back on their expenses, and most important to the kids, why the parents haven’t been able to buy as many things for them.
While children have a basic understanding of what is going on with the economy, they lack an understanding of how to save money wisely to weather the financial storm we are currently facing. By teaching them about conservation and sticking to a budget, as well as showing them the bills that pile up daily and the amount of money that is showed on each bill, it could serve as a good reality check to the kids and help them truly understand what it is like to live during this difficult time. What children learn today and understand, they are likely to hold on to when they get older.
Most kids are able to learn concepts quickly. Parents just need to remember that they are the biggest influences on their children’s lives, and they need to take advantage of that and really try to teach them valuable financial lessons that are so important nowadays. Spending large amounts of money and buying things at will sets a terrible example, because children perceive it as normal behavior and that is how they become spoiled. It should go without saying that paying bills on time and putting food on the table are the top priorities, and buying things for the kids should be done in moderation.
Now is the best time to start teaching your kids about making wise financial decisions. By keeping them informed of what is going on and setting a good example, they will have the financial knowledge needed to avoid the financial pitfalls so many of us have had to endure.