10 Money Matters to Teach Your Children

We, as parents, have made many gains and losses in personal finance. It is our duty to share what we know so that our children can take advantage of the knowledge to invest wisely and also to avoid the pitfalls. I think the following are the 10 most important things our children should know and follow faithfully. 

1. The power of compound interest: Start to save early and take advantage of compound interest Just look at the following illustration taken from Money Sense Getting Smart with Your Money, a book published by Credit Counseling And Debt Management Agency: 

2. The danger of credit and credit cards: Credit cards are double-edged swords. They can serve you or ruin you financially. The most important thing is to avoid credit. Credit means incurring debt and paying very high interest. It can easily lead to bankruptcy. Treat your credit cards like cash. Keep a dollar for every dollar charged to your card so that at the end of a month you can pay the credit card bills fully and promptly.


3. Avoid get-rich-quick schemes: It is always too good to be true. Why should the person approach you? He could have made more money by himself instead of asking you to join in.

4. The importance of working hard for financial success: To be successful and ahead of others it is necessary for you to be innovative and creative. You can run your own business or you can be employed, you need to have unique and original ideas and work hard at it. The money will follow. Money is the by-product of your productivity.

5. Long-term investment: It is important to invest and hold an investment for many years. It will even out the rise and fall of the market Landed property is one of the best investments Land is scarce; it appreciates over time, it is good to rent out and collect rental or as a roof over your head. Be careful to choose a good location. Invest and hold shares of companies that are trusted brands. Collect dividends, get bonus and rights issues and let the value of shares appreciates over time

6. Avoid gambling: The root cause of this problem or bad habit is greed, one of the human weaknesses. Once you are addicted, it is a one-way ticket to hell.

7. The power of networking: Get to know professional people in the field of finance. Learn a thing or two from them. The more you know the more resourceful you are to make a wise decision pertaining to financial issues.

8. Save up for a big-ticket item: Instead of getting it on credit and incurring interest, save up and buy in cash. .In a way, it is to avoid impulse buying and on second thought you may not want the item after all.

9. Live within your budget: Children should budget their pocket money or live within their means when they have started working. The budget should include an amount set aside as savings besides the normal monthly expenses. The most important thing is to avoid overspending. It means incurring debt. It is very difficult to get out of debt.

10. Cultivate the habit of savings: Inculcate the habit of savings. The amount is not important but the habit is. Savings serve many purposes. The money can be put aside as an emergency fund. You can also save up to buy a big-ticket item. When you have saved up sufficiently you can also invest and build your wealth. 


What are the other important things to teach our children about money? Share with us.

Source: 10 Money Matters to Teach Your Children