6 Powerful Money Lessons For Kids

The sway of media, friends, and other external sources makes it imperative for parents and caregivers to guide children toward favorable money habits.

Want to introduce your children to key money concepts but don’t know how? Cultivate their understanding of finances with the lessons below, foster meaningful discussions, and set a positive example as your kids begin to learn and practice money management skills. With proper guidance and opportunities to apply these fundamentals, your little ones will be off to a great start.

6 Financial Lessons

1. Establishing Goals Is Important

Though it’s often overlooked, setting goals is an important part of anyone’s successes. Goals provide direction and motivation, ensuring that we have something to work toward and are well aware of what it’ll take to accomplish them. Help your children set a financial goal, develop a timeline, create a plan of action, and commit to following through.

2. Money Should Always Have Purpose

As kids start to earn money, it’s helpful to teach them early on that money is a tool used for different purposes. Encourage your kids to divide their earnings into designated accounts, jars, or envelopes for each purpose. Begin with the basics of saving, spending, and giving – then, as they get older, include investing. Sticking to a budget takes practice and discipline, so it’s best to start as soon as possible.

3. Parents Aren’t A Bank

Sometimes the simplest answer can also be the hardest, especially when it comes to your kids’ pleas. However, closing your wallet, being direct, and saying “no” will impart the valuable lesson that money is finite. Teaching them they can’t always have what they want is a fundamental aspect of fostering financial capability and important for their long-term financial well-being.

4. Money Is Always Earned

Empowering kids to earn money on their own is a valuable step toward teaching them financial responsibility. Consider paying them for completing extra tasks around the house, getting good grades, etc. Not only will this reinforce that money is earned through effort, but they’re more likely to think twice before spending their hard-earned cash.

5. Make Saving A Priority

Saving is a critical money habit that teaches goal setting and planning while building security and independence. Teaching kids to pay themselves first by depositing a portion of their earned money into a savings account is a great start to ensuring future financial success. Help get them started by opening up their own youth savings account.

6. Decisions Always Have Consequences

As parents and caregivers, it’s natural to want to protect your children. Though you give them your best advice, they may opt for learning things the hard way. If your child wants to spend their money on something they’ll later regret, for example, make it a teachable moment and let them live with the consequences. Talk with your kids and help them understand how they can make better choices next time.

Summary

Use the above financial lessons to teach your children about budgeting, saving, and spending wisely so they can develop essential life skills that’ll set them up for success in managing their finances effectively.