It’s never too late in life to start working on building a better you. In the same vein, it’s also never too early. This is especially true when it comes to instilling your children with the basics of personal finance. Personal finance requires a skill set that takes time and practice to really grasp and hone in a way that works for each individual, which is why youth is the best time to start with the basics of educating your child about money and money management. These are skills that, unlike Calculus or European History, your child will absolutely use for the rest of his or her life. Here are just a few of the important lessons you should teach your children about the basics of personal finance.
- You’re essentially spending hours of your life.
- When you decide to spend $20 of your money on something frivolous, it’s easy to write it off to ourselves as not being that much money, because overall, in the grand scheme of existence, it isn’t. However, this is a dangerous way to conceive money. Instead, consider the fact that the money you are spending is money that you have earned in exchange for hours of your life. You are, in essence, spending your time on belongings; if you work for $10 an hour, you’ve spent 2 hours of your life to buy something unnecessary. When you look at it from that perspective, it helps to give you a better picture of the money you spend and how that factors into the time that you work.
- Money is not a boundless resource.
- When you’re young and you need money, you turn to your parents for some cash to spend on the things you want. However, as you get older, the privilege of having someone just hand you money dramatically drops off. Once you start working, you will likely become responsible for paying your bills and covering your expenses without the help of others. If your children don’t have a basic understanding of budgeting and savings, they could end up in a financial rut and cause serious damage to their financial futures. By helping them see money as a resource that needs to be earned, saved, and spent thoughtfully, you’ll instill them with the tools they need for financial stability and freedom.
- Investing is the single greatest way to increase your wealth.
- If you want to be 100% safe with your money, putting it in the bank or a savings account is a perfectly valid thing to do. However, if you want to turn your money into more money and thereby increase your wealth, investing it is your single best bet. Whether you’re investing in the market, in real estate, or in another method, you’re helping your money to grow and investing in your financial future.