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To help your child succeed in life later on, including financially, you should teach him or her the most important basics about managing money.

One thing first: As with any kind of education, parents are also required to act as role models when it comes to finances. There is little or no point in preaching frugality to the little ones while at the same time constantly overdrawing the overdraft facility with enormous sums. That's why you should start taking responsibility for your finances no later than when you start your family. Here are five things that should play a role in your children's financial education.

Money is finite and a precious resource

Young and many older children, as well as some adults, tend to think magically when it comes to finances: they fulfill urgent consumer desires on credit and hope that money will come from somewhere to pay back the loan. However, this is usually not the case. Spontaneous, unplanned spending that exceeds their financial means puts consumers in a precarious situation. You can't teach your kids this fact early enough.

For learning purposes, you can assign older girls and boys a budget for specific expenses, such as school supplies and clothing. This gives your children the opportunity to practice sensible budgeting and managing under real conditions.

 Saving money is great!

It's a good idea not to spend money, but to save it so they can afford a bigger purchase later on from the savings. Your child will learn this lesson especially well if you provide incentives to save. For example, for every euro set aside from pocket money, you can contribute another one as a reward. It's best if your offspring saves for a specific goal, such as buying inline skates or visiting the zoo with friends. When Junior has enough money together to cover this expense out of his own financial resources, he will experience intensely how much joy there is in saving.

Investing for the future makes more sense than satisfying short-term needs

Financially independent people build up their assets systematically by making long-term investments. These can be, for example, real estate or investments that generate ongoing income and growth in value. It's important that your child understands this connection between smart investments and future wealth early on. To this end, you can give him or her shares or fund units at Christmas or on his or her birthday. You can then watch the share price together and collect the dividends together.

By the way: With the download Exness apps you can create trading funds or shares. The savings plans can be invested from 25 euros per month. You can start, pause or adjust the savings plans at any time. Secure your 20 euro bonus now for taking out your first savings plan.

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Money can be earned in many different ways

Self-employed people and businesses often earn a much higher income than employees because they boldly seize opportunities. Even children should realize that initiative and a willingness to take risks are important basic requirements for financial success. That's why you should encourage your offspring, as soon as they reach the right age for it, to take on small jobs or - even better - to develop independent business ideas. Parents should also support unconventional (but not dangerous) plans and encourage their children to try again if they fail.

Conclusion:

    Parents should explain the topic of money and its importance to children.
    This includes saving and investing; ideally, knowledge should be conveyed in theory and practice
    Young adults who have sufficient knowledge about finances cope better in life