The Blog Of TL Wall Accounting

5 Things You Should Teach Your Child About Money

This might seem like a strange article coming from an accounting firm. Yet, it’s an important topic, more for those who should be doing it than for those who need to be taught the lessons.

Kids don’t understand money. Sure, they know how much they can buy with whatever you give them, but they have no clue on how to save it, invest it, or budget it. That aligns them with many adults unfortunately. But since the idea is to try to make the next generation better, we should try to help them along. And if we as adults can learn some of these lessons, even better.

1. Life insurance isn’t only for married couples. So many people believe it’s best to wait to get married before having insurance. In today’s world, where more people are getting married later in life, it means missing an opportunity to start purchasing insurance at a lower rate because you’re younger and healthier. It also means missing out on the opportunity to save money that you can borrow, interest free, if needed for emergency purposes later on.

2. What you earn isn’t actually what you bring home. You give a kid $10 and that kid gets to spend $10. As an adult, you know that if you earn $500 a week you’re actually bringing home, if you’re lucky, $350 or so. This is important because many young people move out thinking they can afford to live on their own and get slapped with reality within a few months. Many never figure out on their own why their pay doesn’t seem to match what they have to spend.

3. Getting into a pattern of saving or investing money early is always wise. If you can teach your child to take $2 of his or her allowance and immediately put it away into savings of some kind, even a jar in the closet, you’ll teach them the power of building wealth. When, after a year, they see how much money they have saved, it’ll encourage them to keep doing it into the future, and they’ll learn that they’ll never miss it.

4. Just because you see something you want doesn’t mean you should always give yourself instant gratification. If they’re at a store and see something they want, you should teach them the art of shopping around to see if that same item can be bought at a lower price. Sometimes time makes them see things in a different light and they may not really want it. Other times they may see something else they want that’s less costly. In any case, it’s a great lesson of controlling one’s impulses.

5. Those willing to give some of their money to charity will see their own funds increase. There’s something fulfilling about being able to give money to charities when requested. Even if it’s not a lot, everything helps. Once people get used to giving money away they find that they have something else to work towards, thus their income grows because they love having enough to donate. No idea why it works but it does, and it’s one of the nicest lessons to learn.

What do you think? Did you learn any lessons about yourself along the way?

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