Financial master and writer, Jonathan Clements, recently took to Twitter with a simple list of lessons kids need to know about money. Though short and concise, his list is chock-full of perspective kids need in a world where money doesn't grow on trees. The bolded points are his words, followed by a little commentary from me.
1. That new toy you desperately want? Wait a week, and you'll be desperate for something else
Teach your kids about priorities and patience. Teach them how to rank their wants and needs. If you give your kids an allowance, eventually take the opportunity to teach them about budgeting their earnings.
How much do they want to save each week? Over the years one thing will remain consistent: they're always going to want something. Maybe it's a new basketball, maybe it's a new car, but they're going to need to understand how to manage their money (especially once credit comes into the picture).
2. Folks who appear rich often aren't
Teach your kids not to compare themselves to the Joneses across the street. Life isn't a competition. Teach them to focus on the needs of their own family. Many wrongly believe that because the neighbors have more money it somehow means there's less available for you. There's plenty for everyone, but remember that money is not an adequate measurement tool for happiness or success
3. Just because you aren't paying doesn't mean it's free
There's no such thing as a free lunch. That rings a bell, right? Somebody, somewhere, sacrificed something for everything. Make sure your children understand this. Hopefully, this bit of wisdom instills in them a sense of gratitude towards the sacrifices of others, as well as a sense of civic responsibility when it comes to financial obligations they'll face as adults.
4. Mom and dad might earn lots of money. But financial obligations probably devour 90 cents out of every dollar
If you're in the United States, unfortunately, the current education system probably won't teach your kids very much about a very important aspect of adulthood called payments. You've got a mortgage, car payments, utility bills and plenty more (like taxes, ugh, the worst). Help your kids understand that most of what they make on a day-to-day basis is immediately eaten by needs other than snacks and the movie theater.
5. If you were paying the electricity bill, you wouldn't leave the lights on
Next comes a lesson on frugality. Here it is: be frugal. Teach your simple, money-saving habits to your kids right now. They'll thank you when you're older. If you're looking for helpful tips to teach them, check out this article.
6. Those lottery tickets that get folks so excited? They're a state tax on stupidity
A word on wasting money: stop. There's a fine line between wholesome recreational activities and unwisely wasting money. The benefits of taking your family out to dinner are oftentimes very worth the money, but "investing" in lottery tickets probably isn't going to give anyone much of a return, even if you win.
7. When you leave home and live on your own, you'll kill for leftovers like these
Testify. This one is going to be tough to teach. Its most often learned through sad experience and 500 packages of Ramen noodles, but do what you can to soften the blow when the time comes.