My dad started teaching me about money when I was only 5 years old. His wisdom of starting so young really paid off, it avoided many arguments and temper tantrums, and helped me understand money at a young age. Over the next four weeks, I will share some lessons I grew up with:
Give your kids an allowance and teach them the basics of budgeting early
Giving your kids an allowance demonstrates that money is limited to how much you have or earn.
It will teach kids about the choices and trade-offs of managing their money. If the child decides to spend all their money right now they won’t have any left for the future (when they might really want something) and vice-versa, if the child decides to save for a bigger purchase then they can’t spend it in the moment.
Children will learn that adults make choices between short term and long term gratification. As adults, we make these choices everyday but understanding the consequences of these choices is an important lesson to learn.
Saving, Spending & Sharing
When I started getting an allowance at 5-years-old, my father set-up three piggy banks: one for saving, one for spending and one for charity (or sharing). I only got $3 a week but it was enough to instill in me the basic idea behind money management. I quick realized I had a limited amount of money; if I spent it all in one day, I would have none left for tomorrow. Also, I realized that there should be three goals for your money: spending, sharing and savings. I still use this wisdom passed down by my dad in my monthly budget.
**This is the first in a four part series. See next week for part two***