There’s a common misconception that kids don’t know how to handle their money. Adults believe they don’t understand the value of a dollar or the cost of living in the real world. They don’t have to deal with mortgages, bills, groceries and other common expenses. While this may be true, there are several areas where adults could take a lesson from children. If you want to know what money skills you should have, observe the behaviors of children and apply them on a larger scale to your own situation.
Understand Single Mindedness
Most financial advisors will tell you that one of the money skills you should have is to focus on what you want. This is a skill that every child knows. As soon as they see the commercial, they zero in on that toy, dress, or video game with laser precision. Knowing what they want, children will often neglect making smaller, more insignificant purchases because they understand it distracts from their ultimate goal. And the word “goal” is the key. When considering the money skills you should have, take the child’s example and make it your own. Some examples of goal oriented focuses might be:
- Larger purchases.
Even if your bills don’t allow you much wiggle room, just a few dollars a month toward an established goal can make you feel like you’re working for more than just the money.
Write it down
Another of the money skills you should have is the determination to put your goal to paper (even if just a word processing document). Think about the lists children make, not only for Christmas, but often year-round. Items are continually added or dropped, the latter occurring either because the child was able to buy one of the items or it was knocked off the list in favor of something more important. This type of visual prioritizing works well for adults, but don’t just stop at the list. Make a plan for getting there. Here are a few things for consideration when forming your plan:
- How much will it cost?
- What resources do you have at your disposal?
- How long will it take to get there?
- Are there certain expenses you are willing to decrease or cut entirely to reach this goal sooner?
Be realistic as opposed to optimistic. It’s better to estimate on the higher end of “costs versus resources” and possibly get there sooner rather than facing the frustration of changing your plan if you’re unable to accomplish it in the original time frame.
Place Appropriate Value on “Small Amounts”
How many times have you walked past a penny on a street? Compare this to how often children pass up that penny. This demonstrates another of the money skills you should have. Children still recognize small amounts as part of the bigger picture, something adults forget in the chaos of credits and debits.
For an adult, picking up pennies may not get them to that new car, but on a comparable scale, the extra dollars saved by coupons or selecting sale items starts to add up. Also, several credit cards offer cash back rewards with no annual fee just for using their card. If treated like a bank debit card and paid off every month, the consumer only wins in a situation like this, earning free money (yes, it’s really free) which can serve as small increases to the scheduled monthly investment toward the financial goals.
Know How Much You Really Have
Even if children are still using a piggy bank, most of them could probably tell you how much was in it at any given moment. While adults may let such spare change just accumulate, a child keeps close track of their money, monitoring and recounting with each new addition. In these times of automatic deposits and withdrawals, it’s far too easy to miss (or misappropriate) expenditures. Next thing you know, the piggy bank is empty. And on the hottest day of the year when you just wanted a glass of lemonade. Lucky for kids, the piggy bank doesn’t charge overdraft fees.
Along the lines of that lemonade, depending on the parenting style, many children recognize they won’t get that next glass until they work to make the money for it. Loans and credit are inaccessible. While surviving strictly on a cash-only basis isn’t possible for some, strive to be as close as possible.
Be Happy with How Much You Really Have
Of all these suggestions for money skills you should have, this last one is the most intangible but perhaps most important. While it’s good to work toward goals, it’s also important to be proud of what you have accomplished so far. The closest that a child comes to a negative emotion in regards to money is perhaps jealousy that he/she doesn’t have as much as someone else.
Adults are capable of much worse, drawing lines between social classes as obvious as chalk on the sidewalk. Children don’t believe money defines them or separates them from each other beyond a rudimentary sense of one having “more” or “less” than another. Instead they define themselves by what they enjoy in life. Part of this may involve their possessions, but is the happiness that is the end goal for most children.
So the last of the money skills you should have is to simply respect and value the money you have. It can be used as a springboard to further heights. Just don’t let it weigh you down. It’s just money, after all. And probably not many of you pretended you were bankers when you were kids. Define yourself by who you are, and let the money help you along the way.