Money affects every aspect of our lives. We spend our days working for it, and often we spend our nights using it. The problem is money also comes with a significant amount of stress. With everyone talking about inflation, recession, and other economic woes, it’s no wonder we’re all a little on edge about it. Teaching your kids how to manage their money effectively is not only a good idea butit is also necessary. Here are 10 reasons why you need to teach your kids about money.
Why You Need to Teach Your Kids About Money
1) Money Habits are “Mostly Set” By the Time a Child is 7 Years Old
Habits are powerful, and it is no surprise that starting with the right habits can make a huge difference. Did you know that financial habits may be “mostly set” by the time a child is only 7 years old? A 2018 study at Purdue University found exactly that. If you want your kids to be able to enjoy the right habits from a young age, you may need to start sooner than you thought you would.
2) There is No Avoiding It, Your Kids Will Need to Manage Their Money Eventually
There is precisely a 100% chance that your kids will need to deal with money in their lifetimes. They will work for it, they will spend it, and hopefully, they’ll also learn to save and invest it. As a parent, you can prepare your kids for when they will start using money in the real world. Concepts like debt, mortgages, interest rates, retirement and estate planning, and investing in the stock market or real estate can be incredibly daunting to learn. As a parent, you can teach your kids these concepts so they won’t need to face that learning on their own.
3) Kids won’t Learn about Money at School or Anywhere Else
While mind-boggling, we still don’t teach our kids how to manage money in school. In fact, for most children, there is no place they’ll learn about money even though they WILL use it later in life. As a parent, if you don’t teach your kids about money, no one else will. They’ll be on their own. interest rates, retirement and estate planning, and investing in the stock market or real estate can be incredibly daunting to learn. As a parent, you can teach your kids these concepts so they won’t need to face that learning on their own.
4) Teaching Money Will Remind You About the Basics
If you’re like most Americans, you didn’t have much education on how to manage money yourself. You didn’t learn about it in school. It was something you had to learn while living real life. Teaching your kids financial literacy is an incredibly effective way to improve their chances of a good financial future, as well as your own. As you have conversations with your kids about money and how to effectively manage it, you’re also sure to learn a thing or two in the process. You will find yourself saving more, investing more, and spending less on frivolous things. As you live better money habits, you’ll be able to teach your kids more effectively, which in turn helps solidify your own positive money habits.
5) It’s Better To Make Mistakes With Low-Cost Items and Experiences
We all make mistakes, especially with money. Sometimes our mistakes come from impatience, lack of knowledge, or not doing all our homework upfront. Whatever the reason, mistakes will happen. The question is, how costly do those mistakes need to be? Imagine that you want a new car, so you save and take on debt to make the $40,000 purchase. Once you purchase the car, you realize that you don’t need a car this nice, that it isn’t as exciting as you thought it would be, and ultimately you have buyer’s remorse. That is one expensive lesson on managing money. In contrast, let’s say as a five-year-old you wanted to buy a new dollhouse that was $40. You saved your pennies and asked your parents to help you afford the toy. Once you got it, you realized that you don’t play with the dollhouse much, it isn’t as exciting as you thought it would be, and you ultimately have buyer’s remorse. In this case, you learned the same lesson but for a thousand times cheaper. Help your kids learn these principles on low-ticket items, instead of wasting money on mistakes when they are older.
6) A Poor Money Mindset Can Cost Millions
Millionaires think about money differently. They have a different mindset than most people, and they believe in abundance more than scarcity. These simple mindsets are often WHY a millionaire became a millionaire in the first place. They believed that they could earn the money, and they did the work to make it happen. Those with a poor money mindset, on the other hand, believe that money is hard to come by, and they live in a world of scarcity. This mindset often sets people down a path of settling for whatever job comes their way, and becoming depressed that they can’t improve. With the right mindset, the same person could generate significantly greater income for their family. By teaching your kids the correct mindset at a young age, you will be setting them up for financial success!
7) Money Can Teach The Value of Delayed Gratification
Money, at its core, is just a store of value that can be used in whatever way the owner of that money sees fit. Sometimes it makes sense to buy small things right now, and other times it makes sense to wait and save to buy bigger things later. As you make decisions about what to do with your money, you are practicing the principle of delayed gratification. Studies show that delayed gratification can lead to overall greater success in life. Delayed gratification can also help you learn patience. The value of delayed gratification is an incredibly valuable thing for a kid to learn.
8) The Conversations Can Strengthen Family Bonds
Life is busy. Sometimes that means that families can’t or don’t talk as much as they might want to. Having conversations with your kids about money, and helping them learn when it’s best to spend, save, or invest their money, can go a long way in creating stronger family ties. As families spend time together, their bonds will become stronger, and more conversations can happen. Statistically speaking, nearly half of all divorces in America occur due to disagreements about money. Money can tear apart couples and entire families. By spending the time to teach your kids about money you are also strengthening your family at the same time.
9) Respecting Money Can Foster Gratitude
As kids get a better understanding of what it takes to earn money, their perspective on things in life shifts. While young, kids might believe that if they scream loud enough their parents can give them anything they want magically. As their understanding of money grows, their understanding of what their parents need to do to earn that money grows with it. This understanding can create deep-seated gratitude for the money that they do have, and the work that was put into receiving it. By teaching your kids about money, you are also helping them be more grateful.
10) Giving To Others is One of the Greatest Joys in Life
Giving brings us joy, and having money, enables us to have more opportunities to give. As kids have access to more money they can give away, they will be able to experience for themselves this joy. As a parent, you are in a unique position to provide opportunities for your kids to give to others.
How Am I Supposed to Teach My Kids About Money?
Once you understand that your kids need to learn how to manage money, the next question becomes HOW? There don’t seem to be many effective tools out there. Most articles just tell you to “talk to your kids about saving” but how do you do that? You may want to teach them about personal finance, but you also don’t want to bore them to death!
Studies show that the best way to teach kids about how to manage money is through experience. Kudosy is an innovative new tool that is designed to give kids experiences where they can manage money inside a gamified app. Kids can learn about how to manage their limited resources with an in-app currency called kudos, instead of real dollars, so they can learn, experiment, and make mistakes in a low-stakes way. If you’re looking to help your kids understand more about how to manage money, download the Kudosy app today! Kudosy is a free app coming soon to iOS devices. If you are interested in being notified when Kudosy officially launches you can sign up at kudosy.com.