Just like social etiquettes and other social norms that you want your kids to learn, it is your responsibility to teach your kids importance of money and how to wisely use it. Here are some easy yet important lessons to give to your kids about money as early as possible:
- Money borrowed needs to be paid with extra money (interest)
Tell your kids about banks and how you can borrow money from them. Explain to them terms such as debt and borrowings. They must understand the principle of borrowing i.e. if you borrow money (or something) from someone you have to pay them back in a particular time period. To explain this concept in a fun way to your children, borrow some money from them and after few days when you pay them back, give some extra money to them. Tell them about the extra money as the interest that you have paid on borrowing. This will help them understand if they borrow money in future, they need to pay extra while returning the actual amount.
- Choose one among many
Teaching kids about abundance is important. Not kids but even grown-ups like us can not satisfy wants and desires. For kids, it is usual to demand all the things that they can eye upon, sometimes all at once. You as a parent have a role in educating them about desire, necessity, requirement and plenty. If they ask for so many things at once, ask them to choose one out of all. It will help them develop the sense of prioritizing things in the better way.
- Earning money is tougher than they expect
When you use plastic cards in front of your kids they might not know the real deal about the payment you have to do in the future and also the late penalties that can cost you a lot. Your children must understand that working hard is the only way they can earn money for living. Reward systems are the best ways to coach them about the same. Whenever they push themselves hard to complete a given task, or give extra effort to do something, acknowledge them with rewards and let them know that they have earned it. Positive motivation like this will help them to become hard working citizens.
- Pocket money can teach a lot
Ask your kids to decide a pocket money for themselves. Once you complete a negotiation with them, give them a fixed pocket money at the beginning of the month, not a single penny more. Explain to them all the expenses have to be managed within their limits.