| Your 5-year-old daughter has started asking for | | | | interest, which can in some circumstances, double the |
| money to buy sweets and toys. She obviously has a | | | | amount of money you need to repay. |
| good understanding of the concept of exchanging | | | | 5. There is good debt & bad debt. No debt is |
| money for items she wants or needs, but what are | | | | really all that good, but some forms of debt will make |
| the important lessons you should teach kids about | | | | you money while others cost you money. Good debt |
| money and saving. You want to make sure that she | | | | can include a home loan, investment loan or business |
| doesn't grow up into one of those kids that are | | | | loan, as these items have a tendency to make money |
| constantly pestering mom and dad for money, running | | | | above the amount of interest you have to pay. Bad |
| up credit card debts as a teenager, and not having | | | | debt can include credit cards, personal loans or car |
| any idea how to save. | | | | loans, as these items never make you any money. |
| There are 10 basic money skills that every child should | | | | 6. If you don't have the cash to buy something, then |
| learn before they enter the teenage years. It's never | | | | you can't afford it. |
| too late to learn, but most children are far more | | | | 7. Spend less than you earn. Many people these days |
| receptive to ideas from their parents before they hit | | | | are spending 10% to 20% above what they earn, |
| the age of thirteen, than after. | | | | creating a vicious cycle of high credit card interest |
| 1. Money doesn't grow on trees! One of the best | | | | rates, long hours at work to pay the credit cards |
| known and oldest quotes around. It is important that | | | | & in some cases bankruptcy. The knowledge of |
| children understand from early on that money is a | | | | how to budget your money seems to have been lost, |
| limited resource, that mom & dad's bank account | | | | make sure your child learns this important lesson! |
| will eventually run dry if they keep making withdrawals | | | | 8. A portion of your money should be given to the |
| from it. | | | | needy. Around 10% of your money should be given to |
| 2. People go to work to earn money. Money is | | | | those who are in need/charities. |
| something that needs to be earned, you are never | | | | 9. Pay yourself first. This is what I call your sanity |
| going to become financially secure sitting around not | | | | money! Allow 10% of your money for yourself to |
| doing anything, and expecting handouts from people. | | | | spend however you wish. |
| 3. Credit cards are a form of borrowing. Believe it or | | | | 10. Save at least 10% of your money. Like budgeting, |
| not, surveys have shown that an alarmingly high | | | | the skill of saving money seems to have been lost |
| number of teenagers don't realise that credit cards are | | | | over the last 20 years, with fewer people than ever |
| a form of borrowing. If they don't understand this basic | | | | before regularly saving a proportion of their income. |
| concept, it leaves them at risk of running up crippling | | | | With these lessons well and truly learnt, your child |
| credit card debts. | | | | should have no problem managing their finances in a |
| 4. Avoid borrowing money where possible. Wherever | | | | proper manner, and avoiding the credit trap. Don't risk |
| possible, money should be saved rather than | | | | your child becoming one of the hundreds of thousands |
| borrowed as borrowing attracts extra costs such as | | | | of young adults that go bankrupt each year! |