Finance is a crucial part of life, but it isn’t a major focus in school. Parents have the burden of instilling effective money management into their children, though not everyone knows how.
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Dave Ramsey, a personal finance expert and host of “The Ramsey Show,” has some tips for parents struggling to teach their children money matters. He recently put out an Instagram post detailing four areas of finance for kids to learn .
Work
If you want to get rich , buy crypto meme coins, become a day trader, start a dropshipping business or sell online courses. This is the advice that floods social media and the internet, but not Ramsey.
According to Ramsey, teaching your children to work is vital.
“Money comes from work, not from other people, the government or dumb luck,” he wrote in the post. “From an early age, your kids need to feel that emotional connection between work and money.”
Teaching your kids that hard work pays off is an excellent way to make them more responsible. One way Ramsey recommends doing this is to have commission-based chores instead of allowances. Make rules and set clear expectations about how much each chore is worth. Let your children determine how much work they want to put in and, in turn, how much they’ll make.
Providing more opportunities to make money can further instill the benefits of hard work.
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Save
Being able to save up for something is a valuable skill that pays off in the long run.
“If they learn how (and why) to save up for a Barbie today, they’ll know how (and why) to save up for a car or house tomorrow with no debt,” Ramsey said.
Learning how to save teaches patience and helps children develop good money habits. Saving a small amount like a dollar might not seem productive, but over time, the practice of having money that you don’t spend will come naturally.
Ramsey recommends setting goals to help children better understand the concept of saving. Creating a savings goal for a larger purchase will help them realize the power of delayed gratification and what they can achieve by putting money away.
Spend
Spending is the reward that children get for working and earning money . Ramsey points out that if you force your children to save every penny they earn, they’ll end up rebelling and spending everything they make in the future.
One way to teach your child how to spend in a balanced way is to use Ramsey’s envelope system . Help them develop a basic budget that allows a certain amount to go toward spending. Divide their earnings based on this budget and put cash into different envelopes, like spending, saving and giving. Your child can use the money in their spending envelope for anything they want. Once it’s empty, they’ll need to work to make more to refill the envelope and can’t take cash from the other envelopes.
Give
Spending the money you have is common sense for a child, and it’s easy for them to run down to the store and pick up some candy or trading cards. However, Ramsey emphasizes the importance of teaching children to be charitable from a young age.
“Giving is the most fun you can have with your money,” he wrote. “Nothing beats making a waitress’ day with a $100 tip out of the blue.”
His only stipulation is that the giving comes from money that your child has earned, not out of your pocket.
He recommends teaching them to give away 10% of their earnings and to even find ways to give to others that don’t involve money. Volunteering, helping others with a school project, visiting elderly neighbors or visiting an animal shelter are all creative ways to help others for free.
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This article originally appeared on GOBankingRates.com : 4 Main Aspects of Money Dave Ramsey Says To Teach Your Kids