10 Money Principles Kids Should LearnBy Randell Tiongson on February 8th, 2016
Albert Einstein and personal finance – the two are rarely used in the same sentence. But the man behind the theory of relativity said one of the most basic yet essential quotes when it comes to money – “Compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” Well, it isn’t really clear if Albert Einstein actually said it but compounding interest is really a cool thing.
Compound interest is interest added on interest. A 10% yearly interest on Php 100 is not Php 10 every year. This is because of compound interest. In the second year, the Php 100 grows to Php 110 and 10% of that is Php 11. When it comes to finances, the earlier you start saving and investing, the higher the potential of compound interest because of the longer timeline. This means younger folks have, if they start saving and investing early, the upper hand when it comes to finances. This is where parents come in.
Personal finance, even just the basics, should be taught to kids and teenagers. To make this more fun, you can give bonuses and incentives from time to time, such as doubling the amount of money your kids save in X months or giving your teenagers a stock market challenge where the one with the most profits earns a prize.
Aside from compound interest, what are other money principles kids should learn? Look no further. MoneyMax.ph, a Philippine comparison portal for financial products such as loans and credit cards, created an infographic on 10 money principles kids should learn:
From creating proper money habits to practicing both saving and earning, the 10 principles above are sure to give your children a head-start when it comes to their finances. The earlier your kids start, the more time they have to learn, practice, and live the above-mentioned lessons for a healthier financial life for both them and you, as their parents.
To share what we do, my wife and I have been teaching our kids 3 basic money principles whenever they get some money: SAVE, SPEND, GIVE — principles that are truly important life skills for them to have.
Let us teach our children be wise, to love others and most importantly to love God and they will be set for life.
Train up a child in the way he should go; even when he is old he will not depart from it. (Proverbs 22:6, ESV)
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