Teaching Kids About Money And Finance

To help our kids have successful lives in the future we need to be teaching kids about money and finance now. Our children need to know how money, debt and interest works so they avoid the financial traps of overwhelming debt that are too easy to fall into.

We live in a world of credit and finance and we all know how many of us were misled and misunderstood how to handle credit and debt. Our children will need to understand money better than us if they are to be successful in the future.

Understanding money and finance depends a lot on understanding the maths of money, interest rates and credit deals and it is important our kids know how financial carelessness can lead them into serious debt problems.

Many kids today have no idea of the value of money. They have money available to them anytime they need it and they sometimes act like it grows on trees and is free to all. Clearly this is a long way from the real truth especially for families struggling to meet their regular monthly bills or medical expense costs.

Understanding the value of money is a very different thing to knowing the price of things. Money is valueless in itself but the value of money is what you can do with it. and its limitations. Getting value for money is good but buying things because they offer good value makes no sense unless you need the product being offered and you also need to know you are not using money that needs to be used for other, more important things.

Restricting our kids by limiting the amount of money they have to spend and the money that is spent on them can help them to appreciate that you have to stop and think before spending money.

One approach that can work well is to work out how much you spend on your kids each month and then allow them some choice of how that money is spent. This way they learn that if they want those expensive trainers then there are other things they may have to do without for that month or even a couple of months. Your kids will learn that money is a limited resource and used wisely it goes further while using money carelessly means there is no money left at the end of the month to buy anything at all.

Balancing the books and balancing a family budget do require you to have a basic understanding of math and it is important our kids understand the basic requirements of budgeting. They need to be able to plan ahead to visualize what financial expenses are ahead.

They need to be able to prioritize the needs over wants and be firm about sticking to the decisions they made about allocating the financial resources they have available.

The value of a single dollar is much greater to someone who is one dollar short of paying their bills than it is to someone who has one hundred dollars spare at the end of the month. The value of money is very much relative to your financial situation. Teaching our kids to understand the importance of having a little money in reserve for emergencies is an important part of preparing them for life in the modern world.

We talk about living in an oil based economy and our lives are dependent on oil but it could also be argued we live in a financial economy. Everything you see and everything we have to deal with in our daily lives is based on financial dealings and the obvious damage done to our economies over recent years by the financial industry shows how dependent we all are on that industry.

Rightly or wrongly the financial companies control the world. They are not elected and they clearly don't care about anyone but themselves but they dominate our lives and they will control the future our children face as well. Our kids need to be prepared for that world.

It used t be said that cash was king and if you have more money than you know what to do with then you are unlikely to have to face financial problems but you do need to understand money, credit and finance.

Few of us manage to live without credit cards and loans of some sort these days but it is still possible. Though credit cards are becoming more essential for making online purchases and making arrangements over the phone but you can use bank cards or debit cards. These offer an alternative which makes payment transfers of real cash directly from your bank account rather than using a credit facility.

Buying a home almost always means taking on a huge debt over a long period of time and as we have seen recently this can turn sour in some situations. It would be easy to say avoid getting too heavily in debt but invariably the cost of a home means people do have to run close to the wind in their mortgage arrangements. The only things we can teach our kids about this are to plan carefully, make sure the deal they get is fair and achievable and to be on the lookout for financial problems ahead .If they do see financial disaster approaching they will need to act quickly to reduce their financial burden by selling the house, remortgaging or increasing their income somehow.