10 Important Money Lessons To Teach Your Kids

Train up a child in the way he should go: and when he is old, he will not depart from it. — Proverbs 22:6

Money lessons for Kids are not just opening about a bank account, however, it is teaching them about the value of savings and growth. Children should be taught how to manage cash by their parents at an early age. Currently, schools are not equipped to provide training on money management, so it becomes imperative for parents to inculcate financial discipline and acumen in kids. They need to educate their kids on the basic aspects of currency and credit.

These money lessons are fun, critical, help them avoid common money mistakes, and introduce your child to the world of finance. Smart money management will help them to accumulate wealth in the long run and have a peaceful, enriching life in the future.

10 Important Money Lessons for Kids

Here are 10 important money lessons you can teach your kids.

3 Jars - Spending, Saving, Sharing - Money Lessons for Kids
  1. Use three clear jars—Use three clear jars since they give children a visual. Clear jars labeled “Spending,” “Saving” and “Sharing” will enable children to see the money growing. Each time your child gets some cash, divide it between the three jars (50 percent for spending, 30 percent for saving, and 20 percent for sharing). This is the first of the several money lessons you should teach your children.
  2. Set Short-term Goals—Help your child set goals such as buying a toy or a favorite game. Setting up a savings plan will empower them to afford the plaything in a reasonable time frame. 
  3. Provide them commissions, not allowances—Do not provide your children with allowances. Reward them monetarily when they are helping you with household chores such as cleaning, washing, and cooking. Help them to understand that money is earned and not just handed over. You must teach them the habit of tithing for the money they earn (10 percent of income). 
  4. Teach them the Value of Money—Make your children understand that it costs money to buy things. Take them to the store and when you reach the cash counter, hand over the money to your children. This will have more impact on their actions than your speeches.
  5. Stop Compulsive Buying—Children buy things that they rarely use due to peer pressure and to impress others. Show them they will miss on their essential needs if they buy expensive or unnecessary items. They will make a proper financial decision if you can motivate them to postpone their shopping impulses.
  6. Teach them the Power of Compound Interest—If your child is above the age of 11, show them how faster their money will grow from compound interest. First, give them a proper explanation of the terms. Interest is what a bank or a financial institution pays you to keep your money with them. The longer the money stays in the bank, the more money you earn. So, compound interest is, you earn interest on the money you keep in a bank, they add the interest back into your money. Then you earn interest on your new amount of money (which is larger now, thanks to that earned interest.).
  7. Emphasize Giving and Contentment—Take your children to church fundraising events or charity programs that will show them how giving not only affects their lives but also the people they give to. Set them an example by being content with what you have. They need not have the sportiest car in town to be happy. Their Mazda or Subaru will surely solve the purpose of getting them from point A to point B. They can be happy with what things they have and not fret about things they cannot have.
  8. Create a Bank Account—Set up a simple bank account for your child by the time he/she becomes a teen. This will provide them with some experience to use a bank account and take their money management skills to the next level.
  9. Set Long-Term Goals and Educate them on Budgeting—Ask them to set long-term goals such as setting up a college fund by putting aside any money they earn during their free time. Instruct your children on how to budget their income. They need to make plans for their money to spend wisely and make it grow. 
  10. Teach them the Risks of Credit Cards—Once your children turn 18, it will be easy for them to get a credit card. Tell them they can get a credit card only if they can afford to pay the balance off in full each month. If not, they will have a bad credit score, which will affect their ability to buy a car, or home, or even get a job. They may even risk becoming a credit card victim. 

The Bible in Luke 14: 28-30 clearly talks about managing money with regards to building a premises. 28 Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it? 29 For if you lay the foundation and are not able to finish it, everyone who sees it will ridicule you, 30 saying, This person began to build and wasn’t able to finish.

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