It is most important to teach offspring that food, shelter, clothing, entertainment and everything costs money. In effect even living and burning food calories in your body costs money and that money is the equivalent of energy or it is usually a form of stored energy in the form of mass or matter. You can teach that a bought object, mass, or matter usually loses value or money with time and it is called depreciation. Stress that there are certain objects such as rare coins or rare objects or limited editions which may increase in money value with time if they are maintained in unused pristine condition and can sometimes become valuable antiques.
Explain the concept of saving up to buy something where every penny and dollar counts and where a sales tax must be paid. Once offspring can count to a hundred it is time to teach money details such as it takes 100 pennies to make up a dollar and that $2.55 is two dollars, two quarters, and five cents. Teach them to use a calculator.
Dropping small change in more than one piggy bank can teach the concept of saving for the long duration such as a college education or a car and saving for the short duration such as saving for a bicycle, laptop, shoes, and football or baseball.
You can use your own money on a weekly basis to give to your offspring to deposit on a regular basis into your piggy bank for a bicycle instead of buying it instantly yourself and giving the bicycle as a free gift to your offspring. Show your offspring that you too must save to buy them a gift.
You can give your offspring an allowance but stress that it is for helping around the house and use real examples of chores which you expect the offspring to do on a regular basis. Examples are taking out the garbage, bringing groceries from the car to the house, vacuuming, cleaning the carpetless floors, washing the dishes and putting them back in the cabinets, putting the dishes and silverware into the dishwasher, washing the car, doing the laundry, hanging up clothes and putting laundry away in the cabinet drawers, preparing food and putting it on the table, shopping for food, mowing the grass, etc. In effect teach your offspring adult chores around the house and expect them to do it as soon as they are physically able to do so for a weekly allowance of 1 to 10 dollars depending on their age and what is permitted by the household budget.
You can encourage their long duration savings by adding an extra 50 cents for every long duration dollar saved in the piggy bank. When the amount in the long duration savings bank gets big enough then open up a bank savings account in their name and deposit their long duration savings which should not be spent on current desires. The concept of compound interest can be taught which is money that makes more money if invested properly.
Explain brand name and generic purchases with the same ingredients and tell them that they can save money by buying generic brands and get the same value for a purchase. When they are old enough introduce them to the game of Monopoly, Life, and Cashflow 101 which is a game which teaches accounting, finance, and investing at the same time. The more financially literate your offspring become the more intelligent choices your offspring will make in life.
When they are old enough explain that buying with credit cards and not paying the money back on time means an additional cost to the purchased item. This additional percentage makes it more expensive to buy in the long duration. Encourage your children to learn to budget their money with the help of a debit card where they do not learn to live beyond their means with the credit card philosophy. Except for a house mortgage, stress that all debt where you are paying interest of 5% to18% a year, such as on a credit card, is bad debt.
Don’t encourage offspring to invest in the stock market. It has become a gambling crap shoot where you will only lose money in the long duration most of the time. The stock market has become an unpredictable volatile pricing system where hedge funds, big money, and billionaires are responsible for most of the moves in the market. Prices no longer accurately reflect the fundamentals of the stock and the risky new companies which rise quickly in price are soon absorbed by larger companies once they are successful and reach a certain size. The big businesses or virtual monopolies have very little growth potential unless they are international in scope and the value of the stock will barely keep up with yearly inflation if even that much. The new stock market with its emphasis on risky short duration gain is no longer a good long duration investment in most cases.
Teach your offspring the value of the environment and make them contribute some money to the World Wildlife Fund, The Nature Conservancy, the Sierra Club or some other reputable wildlife conservation society.
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