Would you want your child to be knowledgeable about money like Warren Buffet? One year ago, my 5-year old daughter wanted me to buy her a car toy. When I said that I didn’t have money, he replied, “just go to the bank and they will give you some cash.” At that moment, I realized that I needed to teach her about money. So I started researching and came up with these awesome tips:
Lesson #1- Money never grows on trees
For some reason, kids imagine that adults pluck money from tree branches just like apples. I have no idea how they came up with this myth, but if they grow thinking it’s the case, they will be in hot trouble in future. Explain to your little one that you must work for money, and the people at the bank only keep it for you.
Lesson#2- Work with a budget
The best way to teach your son or daughter about money is to give them some and allow them to manage it. Let them keep the cash they use for their expenses. If they decide to blow up their allowance money on the newest star wars figure and they do not have any left for the movie they wanted, that is going to be an important lesson for them. They will understand the consequences of overspending first hand.
Lesson #3- Good things are for those who wait
Teaching children about delayed gratification will help deal with the “buy now and pay later” notion. If they grow with the terrible mentality of borrowing, they might find themselves in deep credit card debts in future. For instance, you can buy a frozen pizza and then make one at home with all the ingredients they love. Although the home-made one takes longer, it tastes much better and they will love it.