25 Mar Every child needs these money lessons
Hi, today is about being a parent. Life changes the moment you know you’re going to become a mom.
Yes, we moms at HWM are financial professionals, so of course, we want our children to understand the value of money.
As a good parent, how do you help your child grow up to be a responsible spender, earner, and saver?
There are three money lessons every child needs to know starting right now.
#1 – Trade-offs. Your child must learn about opportunity costs!
If your daughter got $10 for her birthday, she’s probably so excited to go to the store and buy a toy or two.
At the register, the total rings up as $9. Of course, she has $1 left – and still probably wants something else because #marketingworks.
You go back to the store a few days later and she sees another toy. That’s when you have a chance to teach your child about trade-offs.
Because she bought the first set of toys, she lost the opportunity to buy more toys in the future with that same money.
Yes, she may get frustrated, even beg for you to buy more toys for her.
This is your teachable moment. Teach her that money runs out. When you don’t have enough money, you can’t buy what you want.
These moments will instill the need to be thoughtful about spending and allow her to internalize those trade-offs.
#2 – How to earn money through work.
You can start teaching your child how to earn money through work by setting up a chore chart.
By completing all of their chores each day, they can check off that day and it goes toward a weekly earned allowance.
I even have a friend who takes it one step further with her older children. They have to provide an invoice to her every week to get their pay!
Encouraging your child to earn money through their own business is another great way to spark creativity.
You can show them they have the power to command money into their life.
This is more than lemonade stands, babysitting, and lawncare. Leverage online opportunities to help your child earn a great income for fun.
Between YouTube videos, Etsy, Shopify, and more, there’s no shortage of opportunity!
Imagine your child creating enough entrepreneurial income to pay for part of their own college costs. Now those are real-world benefits.
Pro tip: As your child’s business income grows, show them how to divide their income into portions for savings, taxes, and owner pay. Remember, Profit First!
#3 – Start and grow a savings account.
Seeing your child learn how money can grow is an amazing gift. If you have a younger child, use a clear jar so they can see what they put into the jar.
As your child gets older, take them to the bank to open a savings account. If they’re old enough, a checking account with a debit card could be a great way to start building financial discipline.
It’s likely your child will live in a world that uses little cash at all.
There are so many incredible apps that can help you teach your child about money.
I received excellent feedback on the following apps and tech to support your kids’ financial learnings:
You can help your child learn the importance of savings, taxes, and investing their hard-earned money.
Together, you can see their balances rise and fall based on their spending decisions.
Money doesn’t have to be a ‘taboo’ topic, especially for parents who want to raise great adults for the future.
You can better prepare your child for a successful life with the financial habits to help them pay for the lives they most want.
If you’re looking for more information about teaching your child about money, check out episode 191 of Profit Boss® Radio with Rob Phelan.
We talk about Rob’s new children’s book “M is for Money” and the importance of teaching kids about financial independence.
Interview on Profit Boss® Radio.
To your prosperity,
Your HWM Money Mavens