In my work as a Licensed Insolvency Trustee, I’ve noticed that a lot of parents are not doing a fantastic job when it comes to teaching our kids about money.
Some parents think that kids will learn about money management by themselves when they grow older. Others simply do not want their kids to face the harsh realities of life.
The truth is that kids learn about how to manage money from their parents in daily life. The earlier children get exposure to proper money management, the easier it is for them to become money wise later on.
Teaching money management to kids
Here are the some simple principles that we should teach our kids about money:
- Money comes from working, not from the ATM
There is no free lunch in this world; everybody has to work hard to get money.
- What we want is different from what we need
Toys and candy are not necessities, so buying groceries and school supplies comes first. That is why Mom and Dad pay the rent first before they book an expensive vacation.
- Save money for future goals
If the kids dream about something big, they should save up for it. And saving for the future should be a habit. 10%-20% of everything we earn should go into our savings account automatically.
- Money can make money
If the kids have a long-term goal, they need to learn how to invest the money properly.
- A credit card is not a fun toy, so use it wisely
We have to pay back all the money we borrow eventually. If we only pay the minimum amount every time, we will pay a much higher price for the money we borrowed. So making the full payment on a monthly basis is a good habit.
Do you need help with money management, or need a new financial start? Contact us for a free, non-obligation consultation to learn about how a consumer proposal or bankruptcy can help you to better manage your money, or get out of debt.