It is important that you teach your kids about money. Some parents make the mistake of never discussing finances with their children. In many cases, it's because they lack adequate knowledge. But even if you're not an expert, you can give your children a basic financial foundation. This can get their financial future off to a good start. Here are seven things that could happen if you don't teach your kids about money.
1. They Might Think That Money Grows on Trees
If you don't teach your kids about money, they may develop the mindset that money grows on trees. Although not literal, your children may think that money is readily available whenever they need it. This is especially true if you're always going into your pocket when your child makes a request. It is important that children understand the importance of working for what they earn, and because of other obligations, money may not be available for spending.
2. They Won't Understand the Value of a Dollar
If you do not teach your kids about money, there's a chance that they will grow up not understanding the value of a dollar. Therefore, they may not learn how to stretch their dollars and make the most of their allowances. To instill this lesson in your children, give each of them a reasonable weekly allowance. And if your child wants an item, encourage him or her to purchase the item. This way, he understands what it takes to get the things he wants.
3. They Won't Learn Financial Patience
As an adult, you've learned that you can't always have everything — at least you should have. Therefore, you have to delay certain purchases, or only buy what you need. Unfortunately, if you don't teach your kids about money, they may not learn this lesson until later in life.
4. They Might Not Learn How to save
Teaching your kids the importance of saving can be extremely beneficial as they get older. It's harder to establish good savings habits later in life. However, if you give your children an allowance, and encourage them to save a percentage, they'll get into this habit at an early age, and this habit can carry into adulthood. Therefore, it'll be easier for your child to save for a house, a car or any other high ticket item.
5. Sets the Stage for Credit Card Debt
Unfortunately, if you do not teach your kids about money, they have a higher chance of developing credit card debt in adulthood. When children understand money and the importance of saving up and financial patience, they’re less likely to make impulsive purchases.
6. They’re Likely to Make Unwise Financial Choices
Giving your kids a good financial future can ensure that they make wise financial choices in the future. If your kids don't know much about money, budgeting, or credit management, they might pay their bills late, overspend or fail to compare prices when shopping.
7. It’s Harder to Change One’s Mindset
If you don't teach your kids about money when they’re young, they’ll have to learn money lessons by trial and error as they get older. But unfortunately, it's harder to change a bad routine once it's been established. Therefore, if your child has a history of making bad financial decisions, he or she may continue to make bad decisions well into adulthood.
Talking to your kids about money may seem like an intimidating subject, but it doesn't have to be. There's plenty of financial education available online to help you get started. Your advice doesn't have to be perfect, but it does need to be right.
What financial lessons do you think are important to discuss with kids?