A good time to start your kids on the path to developing good savings habits is as soon as they begin asking for more expensive toys. By this stage the child can understand the concept of exchanging money for items he/she wants or needs. Along with that concept comes the requirement that for larger more expensive items, money may need to be put away (saved).

There are a number of basic money skills that every child should learn before they become a teenager. Kids are more receptive to your ideas before they hit 12-13, so starting early is a good way to get them thinking the right way about money.

1. Money doesn’t grow on trees! It is important that children understand from early on that money is usually a limited resource.

2. People go to work to earn money. Money is something that needs to be earned, you are never going to become financially secure sitting around not doing anything, and expecting handouts from people.

3. Credit cards are a form of borrowing. The money obtained from credit must be payed back at some point.

4. Borrowing money can lead to problems. Accumulating a large amount of debt can have terrible impacts on your personal life.

5. Good debt and bad debt. Some debts, such as borrowing to buy a house can be a future investment and essential for your goals nd lifestyle. Other debts, such as frivalous expenditure is not worth creating as the reward is less substantial.

6. If you don’t have the cash to buy something, then you can’t afford it.

7. Spend less than you earn. Many people these days are spending 10% to 20% above what they earn, creating a vicious cycle of high credit card interest rates, long hours at work to pay the credit cards & in some cases bankruptcy. The knowledge of how to budget your money seems to have been lost, make sure your child learns this important lesson!

8. Save at least 10% of your money. Like budgeting, the skill of saving money seems to have been lost over the last 20 years, with fewer people than ever before regularly saving a proportion of their income.

If you can pass on those tips to your kids, you are setting them up for financial success in the future!

Tags: Children, Kids, Saving, Saving Fundamentals, Saving Plan