Obviously a little cute toddler like the one pictured will never understand the meaning of money at such a young age however, teaching your kids about money when they’re younger can help them build good financial habits for the future.
Credit: In a nutshell, you borrow money to pay for something with the intent of paying that money back within a certain time frame.
If your child borrowed money for lets say a car and he/she missed some payments, it could possibly lower their credit rating. It may also cause your son or daughter to pay more in the long run and prevent him/her from borrowing what they need in the future.
A child must understand that it is smart to borrow as little as possible unless it is necessary. In certain situations such as borrowing money for education or a house, a loan can be very beneficial and if your child has a good banking history this will go in their favour in securing a loan.
It is often easier to understand a concept through real life examples, such as:
Another way to teach your kids the value of money is to put your teachings into action, for example:
If they don’t pay on time, charge them a late fee and calculate interest on the amount owed. This may be a case of tough love, but they’ll learn the lesson from you instead of from a less-forgiving credit company down the road.
We understand that it is not always easy to say no to our children and it is only natural to get the urge to spoil our kids. However, you do not need to be overly hard on your children’s financial approaches, but it is important to teach them valuable financial decisions so that they understand the importance of money growing up. Teach them to save and to make good financial decisions early on and they will thank you in later years.
Remember we are here to help you: To discuss your financial requirements, please contact a member of our financial specialist team today.