Seven Important Things To Teach Your Children About Finances

Starting your children off with a right view of finances is so important
these days - especially when debt seems to be a common way of life for so
many. Who knows if the young parents of today were ever taught such a vital
lesson in life as being able to properly manage their finances. Perhaps
their lives would have been so much different. We can never know - and can
never change it. We can, however, change the way our own children look at
money. Here are some important lessons to teach your children about such an
important subject - their money.

1. Money Does Not Grow On Trees

Children do not understand, at least not at first, that there is not an
unlimited supply of money at the bank, or on the credit card. If they see
something they want to buy, you will often hear "Why don't you put it on the
credit card?"; or, "Write a check!" To them, who only see you pay for your
purchases in this way, they do not understand that you have to pay for it
sometime. Explain to them the process that they can only buy what you have
money to pay for - somewhere.

2. Saying "No" To Some Unnecessary Things

One of the most valuable lessons a child can learn is to willingly choose to
say "No" to some purchases - even if they want it. One of the greatest
incentives a child can be given to do this is because something better can
be obtained if they will save a little longer for it - and wait. Do not give
them money every time they want it - this teaches them that there is a
bottomless supply - when there isn't.

3. It Is Important To Save

Besides saving for something that they really want, which is a good reason
in itself, teach them to save for unexpected things. For instance, if they
receive a regular allowance, or, are working after school and earning some
money on their own, teach them to put aside a regular percentage - say
10-15%.

4. Comparison Shopping

Let your children know that there is a vast difference in the quality of
similar products. There is also more than one place that sells most items,
and somewhere there may be a better deal. Show them that by looking around,
and waiting a little longer, they may be able to get the item they really
wanted, and be able to have a little money left over.

5. Establish A Budget

Once your child is receiving a regular amount of money, you will want to
show them how to plan for a wise use of that money. Help them to know how to
set money aside for basically three different things: money to spend now,
money for special purchases that require savings, and long-term savings.

6. Teach Them About Credit Cards

Credit cards and checking accounts are similar in that they provide ease of
purchase, but without the necessity of carrying cash. Your children only see
you handing over the plastic, or another piece of paper. But they never see
that cash is involved - it is behind the scenes to them. Show them how that
you must pay monthly for both and that you should never buy more than what
you can afford - except for some larger purchases - because the bills for it
will come!

7. Give Regularly To Good Causes

Probably one of the greatest joys that a child can have in the use of their
own money is the joy that comes from willingly giving their money to causes
greater than themselves. By learning to give some of their money often to
causes such as their church, or a charity, they learn that their money can
be a blessing to others, and it will prevent a stingy and selfish outlook on
life and on their money.

About The Author: Joe Kenny writes for the UK personal finance sites
http://www.ukpersonalloanstore.co.uk and also http://www.cardguide.co.uk