6 things about money kids should know before they are 12

When was the last time you did not have to struggle with your daily finance? Everyone does, no matter how much economics and finance we have learned in our whole life. According to psychologists, the basics should start from the age of eight years-old. Here are six things your kid should know about money before he is twelve to make him a master of financial judgements and decisions.



1. Budget- Mastering budgeting skills is as important as learning the alphabets. Starting from the amount you spend on the property you live to making a simple dinner, budgeting is one of the most important skills of life. This would teach him efficient money management tricks for the future.

2. Savings account- Teach your kid to save penny. Well, every parent does that. But teaching your kid to save penny not just to buy toys is what the deal is all about. Trust it, the kid feels divine and responsible when he buys a grocery instead of a toy with his saved money.



3. Debt- No one likes to live on debts. Remember the time you had to compromise your road trip to pay your house loan? You definitely do not want that for your kids. For that they need to understand what debt is and how can we be debt-free for life. No advice can make them more competent than your advice based on your own financial experiences.

4. Credit Cards- This is the right age to clear the misconception kids have that credit cards do not hold free money. You have to pay off the credit at the end of the month with interest.



5. Compound interest- Teach your kid what is compound interest in terms of exact numbers and calculations and not just the mere meaning of it. Keeping your kid away from numbers won’t help either of you.

6. Stock- You do not want your kids to be lost while talking about shares and numbers, like often we are even at the age of 30. It is true that the complexities of stock market are difficult to simplify, even for a pro. But that doesn’t mean it is perfectly fine for your kid to stay ignorant. In fact this is just the age when they should start. Start with simple things. Tell him that buying a stock means buying a part of a company. If the company profits, he will get a part of that profit. And, if the company suffers a loss, he will have to bear a fair share of the brunt.

(image credits: flickr)