Money Lessons for Pre Teens

Financial literacy is a vital skill in life and true monetary success is highly dependent upon it.  Unfortunately, very few young people receive any kind of formal education on the subject of money, the result being a populace of young adults who encounter various financial brick walls very early on in life.  As a parent, teaching your child at an early age about personal finance is an important step in ensuring prosperity for your child’s future.  The good news is that there are a number of simple, straightforward money lessons that virtually any parent can help his or her pre-teen understand.

Lesson #1:  Money doesn’t grow on trees.

We’ve all heard the saying before, but most of today’s youths have never really stopped to think about its true meaning.  Teaching your pre-teen where money comes from is the first step in helping him or her develop an appreciation for it… and for where it goes.  Young people all too often simply have to ask mommy or daddy for money to buy what they want.  And all too often their requests are granted without discussion.  Rarely is it that pre-teens are forced to earn the money that they spend, and even less frequently are they made to understand where it came from.  However, once your pre-teen begins to understand that money is not finite, that there is not a never-ending supply of paper and coin, and only after they truly comprehend that money is to be earned are they are less likely to take it for granted  This simple lesson instills a more insightful thought process into how, when, and where they will choose to spend it.

Lesson #2:  Know where your money is going.

Teaching your pre-teen that every dollar he or she receives should be carefully thought about as to where it is going to be spent is another important money lesson that is better to be learned sooner rather than later.  Every dollar that your pre-teen earns should have a predetermined destination.  Simply put, teach your child how to make a budget.  This is not to say that there should be no room for spur-of-the-moment splurges.  It is perfectly okay to set aside an allotted amount for having fun, going out with friends, buying that new pair of jeans, or whatever else it is that your child enjoys.  The important thing is to impart an understanding in your pre-teen that budgeting her money, understanding where it  is going, and practicing self-control when necessary is a crucial aspect of becoming a responsible adult.

Lesson #3:  A penny saved is a penny earned.

It is difficult for many young people to understand the value of saving.  Your pre-teen might will be tempted to spend as much cash as he has in his pocket.  Yet, the earlier the idea of saving is taught, the earlier it becomes a habit.  Helping your child grasp the importance of saving is perhaps the most important lesson of all, and perhaps the most difficult.  As a parent, you might suggest opening up a savings account at your local bank where your pre-teen can put away a set dollar amount every month.  Or you may help him or her choose to set aside a certain percentage of what he or she earns.  If you are in a position to match all or part of his contribution, do so.  This is a both a great incentive and a nice reward for saving.  Whichever method you and your pre-teen decide on, be sure to frequently remind him or her that there will be a time when he or she is grateful for making a responsible choice.  Chances are that your pre-teen may not understand this rationale right away, but it will be much appreciated he or she drives to school in a new car while waving at envious friends who wait for the bus.

Lesson #4:  Don’t spend tomorrow’s money today.

Easy credit was one of the main culprits in the recent economic troubles that our nation has experienced.  While your pre-teen is too young to fall into that trap today, college campuses are waiting with credit card representatives eager to sign them up for a new account on the spot.  Credit is not necessarily a bad thing, but it is essential that your child have a basic understanding of how the credit system works.  Explain to your child that it is important to live within your means and only borrow money if it is truly necessary.  Point out the risks involved in borrowing and illustrate how borrowing even a small amount of money can lead to owing much more than that in the future.  It is much easier to educate your pre-teen on these basic financial lessons at an early age than it is to watch as he or she struggles to clean up a mess created because of bad decisions.

Armed with a solid foundation of financial understanding, your pre-teen will have a great advantage in life.  Good money habits learned at a young age will soon develop into good money habits as adults.  And good money habits as adults are the cornerstone of financial success.  The most important thing to remember, though, is not what you teach your child.  The most important aspect of parenthood is to provide a good example for your child.  Practice responsible money habits yourself and your pre-teen will be certain to notice. Pre-teens are much more likely to be influenced by the patterns of behaviors that the observe, rather than simply what they are told to do. Providing a good example for your pre-teen is of utmost importance when teaching your soon-to-be adult the values and principles necessary for a productive and prosperous life.