“Mom, I want that!”
“Dad, can I get this?”
“Why can’t I just get a new one?”
Have you ever heard your child say one of these? How can you try to avoid these statements in the future and raise financially savvy kids? Take a look at four lessons to teach them now:
Lesson #1: Money has value.
One of the first lessons to teach children is that money has value. No matter how much money you have, they need to understand that one dollar is one dollar. It has the same purchasing potential regardless of who is holding it. Every dollar does matter when you’re saving for a new bike, and later a car – or even college.
Lesson #2: There’s a clear difference between "needs” and “wants.”
This discussion will be different for each family depending on your financial situation and the age of your children. No matter what your circumstances may be, it’s critical children learn that everything they want is not genuinely something they need. For example, you can make the case that food is a "need." While candy is a type of food, it’s not a need. Another example of a need is clothing – but how many pairs of pants do you actually need, and must they be name brand? Buying “wants” now and then is fine, but only after needs are met.
Lesson #3: Patience is required when it comes to money.
Exercising patience is essential to proper money management. While it’s enticing (and easy) to purchase a "want" right now, it’s not always the best move. For example, is buying the latest smartphone the first day it becomes available a fiscally savvy move? Probably not, because when the technology is new, it usually costs more. If you’re willing to wait six months before you purchase it, you’ll likely save money in the long-run and enjoy the same phone.
Lesson #4: Allow children to make final decisions with their money.
One of the harder parts of parenting is when it’s time to take a step back and watch them implement what you’ve taught. So, when your child asks for something, you can simply respond with the statement, "It's your money." The child then has to make the final decision as to how they will spend the money.
If your child is eager to save their money, BancorpSouth has a Young Savers Account that’s perfect for younger children.
Teaching these financial lessons today will help your children become financially savvy adults tomorrow.