Wondering what life skill you need to teach your kids now? We are sharing the number one life skill (money management) that all kids need and how you can teach it to your children today.
We here are Skill Trek believe that there are many life skills that can help us manage our lives more easily. Some are critical. Others are not essential, but can definitely come in handy. Among the critical life skills, there is one that proves, time and time again, to be THE most important.
Now, before I go on, I admit there is, of course, a case to be made for communication being the #1 skill, but there is one that, in my opinion, can have a bit more of a negative impact if it’s not mastered.
The Life Skill Everyone Needs
The #1 skill that everyone should possess:
From the time you turn 18, you are inundated with offers to sign up for credit cards. After high school, kids all over the world are heading off to college, many of them taking out student loans to fund their education. If they go straight into the workforce, young adults often have to manage to not only rent a home, but to furnish it, pay utilities, buy/lease and maintain a car (or gain access to some other form of reliable transportation), obtain a wardrobe, and so much more. Not to mention they have to eat!
Why Money Management is So Important
Without solid money management skills, many young (and not-so-young) adults end up struggling to make ends meet. Many end up in deep credit card debt. Or wind up graduating with so much student loan debt that it will take their entire lives to pay it off. Even if they manage to obtain a well-paying job, without good money management skills, they may still end up stressed out, with not enough money left over to enjoy life. They may become adults who end up in even more debt, losing their home in foreclosure and so many other financial stressors that plague Americans.
How to Teach Money Management
However, this doesn’t have to be the case.
We can (and should) start teaching our children about money. And we don’t have to wait until they are teenagers with their first paying job to do it!
People often ask us “ When can I start teaching my child about money?”
Our answer: as soon as possible. In fact, we believe that you can start as early as 3-5 years old teaching your kids five important money lessons:
Lesson 1: Sometimes you have to wait to get what you want
Kids aren’t exactly known for their patience. However, it is a fact of life that you can’t always get what you want right away. Especially if you have a budget (which, let’s face it, most of us do). In reality, we have to prioritize our spending and, often, we have to save up for big purchases. And sometimes, even if we have the money in the budget, we still have to prioritize NEEDS over WANTS.
Lesson 2: Money is earned
As kids, the concept of money can be hard to understand. Think about it from their point of view. You go to the store, hand over bits of paper or swipe a plastic card, and then you get to take home something that you didn’t have before. They don’t see you go to work. They don’t know that in exchange for working, you are paid a set amount of money. These are things that they have to be taught, either theoretically (by explaining what you do and how you are paid) or practically (by implementing a chore/allowance system or helping them to earn money via something like a bake sale).
Lesson 3: You need to be smart about how you spend your money
Once your child learns that money is earned, they need to learn that it’s not infinite and needs to be managed. That is where budgeting comes into play. Teach your kids how to figure out what they want and need to spend their money on so that they can plan for it and spend their money wisely.
Lesson 4: Consider your options when shopping
Another key skill when it comes to spending wisely is to shop around. In this age of the internet, you can almost always find a variety of options for purchasing something. Often, you can find something for cheaper elsewhere (without sacrificing quality). Talk to your kids about comparing prices, looking for sales, and also about money-saving methods such as couponing. My motto is “Why pay full price for something when you can save money?”
Lesson 5: Only borrow what you can easily pay back
Now, this lesson might be a bit harder to master. After all, if you can easily pay something back, why borrow the money in the first place? However, debt is a real and serious issue, so it’s important that we teach our kids about how to avoid debt and how to manage it when it’s not avoidable. For example, if borrowing money from a person, they should have a plan in place to easily pay the person back. And if they use a credit card, they should try to pay it back in full each month (which means they should not spend more than they can pay back in one month).
If you would like even more information about how to teach your kids money management skills, financial literacy is just one of the 500+ skills you have access to in our Skill Trek program. To get started as part of the Skill Trek family, head over to our website to sign up!