- Teaching kids about personal finance from a young age can help them develop solid habits.
- This year, I intend to teach my children about budgeting, spending wisely, and knowing when it pays to spend more.
Here's what’s on tap for my children on the financial education front.
Although I'm not particularly big on New Year's resolutions, this year, I made one -- to teach my kids a few important financial lessons. Now that my oldest is in fourth grade and my twins are in first grade, they're old enough to understand certain concepts relating to money. And my philosophy is the earlier I start setting them on a solid path, the better. With that in mind, here are three specific financial lessons I'm teaching them this year.
1. The importance of budgeting
My children understand that money comes from somewhere -- the work their parents do -- and that it's not unlimited. I'm taking that concept one step further by showing them what it means to follow a budget.
I've actually shared our household budget with my oldest before. And my hope in sharing it with my younger children is twofold.
First, I want them to see what budgeting looks like -- how we allocate money to things like housing, transportation, food, healthcare, leisure, and savings. I also want my kids to appreciate the value of money and understand the reason we can only order takeout once a week, for example, is because we have a certain amount of money earmarked for food and we can't go over it.
2. The importance of being frugal when possible
A big lesson I want to teach my kids is the more money you spend in one area, the less you'll have for another. And that's why it pays to be frugal when possible.
My household is frugal in a number of ways. First, we drive a 15-year-old car that's seen better days because it's paid off and still runs (albeit not that well at this point). While we can afford a more comfortable car, we're willing to deal with an older one with quirks because it saves us several hundred dollars a month.
We also tend to be frugal when it comes to buying clothing. Between outgrowing and destroying their stuff, there's no need for my children to wear high-end brands. Rather, I'll often shop at discount stores for kids' clothing or accept hand-me-downs from friends with older children. As a freelance writer who works from home, I refuse to spend a lot of money to clothe myself, too -- not when it's perfectly acceptable to show up to Zoom meetings wearing the same sweatshirt over and over again.
3. How being too frugal can backfire on you
I want my kids to understand that while it's okay to take the less-expensive route in some areas, that doesn't always pay. A big reason my family spends so much money on groceries is that I serve a variety of healthy food. We eat a lot of fresh fruits, vegetables, and fish, all of which cost more than the many less-expensive alternatives out there. But I believe food is one category it's okay to pay up for.
I also won't skimp on quality footwear for my family. We're runners and hikers, and I know cheap shoes can lead to injuries. That's not a risk I'm willing to take, which is why I'll plunk down $50 for a pair of sneakers for my kids -- even if I'm not willing to spend more than $4 on a shirt.
If you have children, it's a great idea to sit them down at a young age and teach them about money -- how to manage it, save it, and spend it wisely. Money doesn't have to be a taboo subject, and if you're open about it, your kids might benefit in more ways than one.
Alert: highest cash back card we've seen now has 0% intro APR until 2025
If you're using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.
In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2023 The Ascent. All rights reserved.