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5 Financial Concepts Kids Should Know By Age 10 - Tuesday, April 01, 2014


Reflect for a moment about what financial information you wish you had known about sooner.  How did you learn about money?  What kinds of mistakes were made when you first started handling your own paycheck and checking account?  What do you wish you had learned sooner?

The most common response people share during workshops is that they wish they had learned about handling money efficiently a younger age.  Now is the time to "pay it forward” and think about how you can introduce practical money management skills to your kids.  As you plan your child’s financial development, the following concepts serve as a great fiscal foundation which will guide future decision making.

Money is earned:
Help your child grasp the concept that money is earned through work; it doesn’t magically appear out of an ATM or your wallet.  Many parents reinforce family values by assigning children household chores as a necessary part of productive family life, but other "extra” paying jobs can be a great financial teaching tool.  Lemonade stands, babysitting jobs, dog walking gigs, and other ventures offer kids the opportunity to see and appreciate the financial rewards for their labor.

Develop the habit of saving money:
Saving money is a habit, so start this practice early!  Set the foundation for future financial security by creating a practice of saving at least one-third of all money earned or received.  Children who learn to save early will continue to save as teens and adults.

"Needs Vs Wants”:
Ensuring that "needs” are met before splurging on "wants” is critical for future money management success.  Have them use their money for some of the things they need such as school field trips and school supplies.  Learning early in life that money must be spent on more than just "wants” will help kids develop a sense of balance and set financial priorities. 

Money is limited:
Help them understand that there isn’t an endless stream of money to spend; it has a definite end so purchases must be prioritized.  Tie this lesson in with the "needs vs wants” message and give your children the gift of financial balance.

Live Within Your Means:
Learning that you can’t have everything you want helps children determine what they really want.  Allow your child to set spending priorities, encourage them to think about what they have before making spending decisions, and help them explore the benefits and consequences of various purchases.  This skill will help your kids become savvy shoppers who can think critically and confidently as young adults.

How Neighbors can help:
Come to our next free community workshop!


 

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