Effective Ways to Teach Your Children About the Value of Money

Do you know how to teach your kids about hard work, saving money, and the value of money? Think back to when you were a kid. What did your parents teach you that helped shape your character and values?

Recent economic trends have revealed that ignorance is rampant in matters of finance. The lessons learned by financial illiteracy are not easily unlearned. Those who are ill-educated in the matters of finance cannot easily cope with the financial crises facing their households. And it's no wonder. Many families go through multiple generations, where the financial wisdom of a parent is not passed on to their children.

Don't let this happen to your children. You can start now and teach them the value of money and how to manage it.

Wants vs. Needs

There’s a common, incorrect belief that your children can figure it out independently. They don’t need to be taught how to manage money. They will learn how to manage money by earning it and saving it, right?

Wrong!

While kids do have to earn money to buy what they want, and this does teach lessons about the value of money, it will not teach them about the difference between wants and needs.

What is a want, and what is a need? Should my kids need to be taught the difference?

A want is something that we wish to have but is not essential. A need is something we must have to survive. Without food and water, you will die. Without clothing, you will die. Without shelter, you will die.

These are needs.

As a parent, you need to teach your children that there are certain things they need to have to survive and that there are many things that they want but that are not essential for survival.

This is about teaching them the difference between needs and wants.

Eventually, your kids are going to grow up and get jobs. And if they have not been taught about the difference between wants and needs, it is likely that they will not be as good at managing money as you want them to be.

Make Them Work for It

Many parents are leery of their teenage children working because they don’t want their children to spend all of their time working.

They think their children will neglect their studies or other responsibilities if they have a job.

They’re wrong.

Your teenager won’t lose interest in studies and training by working. They may even become more responsible.

There are a number of reasons to encourage your teenager to work. Here are a few:

• Teaching them the value of money
• Teaching them the value of time
• Helping them face the challenges of working

So, encourage your teenagers to get a job. Follow the same rules for your teenagers as you follow for your pre-teens. That is, allow them to earn money for needs only, but not for wants.

Start Today

Teaching kids about money starts before they can earn their own money. The lessons learned by your kids in the early years will set the stage for their future financial success. So, be a good financial role model for your kids. Teach them about saving money and the value of money.

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