There comes a point in every kids life when they begin to realise that candy and toys don’t simply fall from the sky like manna from heaven; they are bought and paid for with magic tokens called money. That’s when they stop asking for a candy bar and start asking for pennies to spend in the store.
Some kids never grow out of the magic token stage and just go on believing that there is a never-ending supply of cash that is always there to pay for the latest gadget, or bail them out of trouble when they’ve maxed out their credit cards. Again!
Money Doesn’t Grow on Trees
As a parent, the best thing you can do for your kid’s future fiancial health is to teach them from an early stage that there is no ever-replenishing source and that money can indeed run dry if not carefully managed. They need to know that money does not grow on trees.
Money is Earned not Given Away.
When a child is old enough to recognise that money buys candy and toys, he or she is old enough to learn that money is earned not just given away for nothing. Giving money as a reward for say, keeping a room tidy or being helpful round the house helps a child connect the dots between work and money.
It’s Better to Save than to Fritter
When kids are first given their own money, they itch to spend it immediately. The idea of saving it up towards something special never crosses their minds. If there is a book, toy or item that they really want, encourage them to save up for it. On the day they have at last saved enough to buy the treasured item they will almost burst with pride – and rightly so, they have learned a very important lesson.
Saving for a Rainy Day
Saving towards something is a more concrete concept than ‘saving for a rainy day’. Children don’t understand the need to build a financial buffer against hard times. After all, Mom and Dad are their safety net. However, by the time the idea of saving towards ‘something’ is understood, your child has already started to develop a habit of putting his or her money away and not spending all of it immediately.
Helping your child to understand the value of money from a young age makes it less likely that he or she will fall into a deep financial hole later in life. It also reduces the liklihood of having to bail them out of trouble ten to fifteen years from now.
