With summer coming to an end and school returning, right now is a great opportunity to teach your kids about money.
“Just like we want to teach them about eating healthy, exercising, and not sitting in front of the TV, we also have to include financial and basic money management skills,” says Stephanie W. Mackara, president and principal wealth advisor of Charleston Investment Advisors.
Here are five crucial money lessons to teach your children right now.
Needs vs. Wants
If you are making cuts to your budget, looking at what is necessary and what is not, explain to your children what you are doing and why. Differentiating between a need and a want will help them build smart spending habits.
How to Make Money
With the changing job landscape for teens, normal jobs may not be available. But there are also opportunities to be entrepreneurial.
You can even encourage your younger kids to think about how to make some cash. It can be anything from raking leaves and mowing lawns to child care and tutoring, especially with so many parents trying to juggle work and their younger kids.
Pay Yourself First
Once they start making money, make sure your kids know to start putting some of that money aside. They will learn discipline and how to value themselves and their goals.
“Teach your kids that saving equals freedom,” Mackara said. “When you save money you have the freedom to do so many different things.”
Spend Less Than You Earn
It’s important to instill in your children the importance of not overspending. Creating habits early can make it second nature for kids when they are older.
“It is just a habit that you save, and you spend less than you earn,” Mackara said.
Saving money is crucial, but investing is a great way to really grow your money long-term, Mackara said.
Teach your children as young as possible the benefits of compound investing, which is essentially your interest earning interest, she advised.