There are a lot of good reasons to teach your kids about money. You don't want your children repeating your own financial mistakes. Also, if you raise financially shrewd adults, chances are they won't someday be asking you for money. By helping them, you're helping yourself.
When you inculcate financial literacy in kids at a young age, they end up becoming financially responsible adults.
Teaching your children about money at any stage is going to take time on your part. It won’t always be easy. But if you want your children to know how to successfully manage their money when they get older, taking the time now will be worth it.
It is important to teach your children that there is power in saving. They should be taught to avoid borrowing or living beyond their means.
Helping children learn about financial planning can be a blessing to them as they grow up.
Here are a few tips for parents to teach children about financial planning.
Teach them budgeting:
Get your kids involved when you are creating your monthly budget. Explain to them the difference between what is necessary and what isn’t. This will help them develop smart spending habits.
Enlist their help in paying the bills, or let them plan a week’s grocery.
Instill in them the habit of saving:
In addition to budgeting, saving is a habit that takes time to build. In the age of instant gratification, it becomes fundamentally important to explain to your children the need for saving. The better way to get them motivated is by helping them set a saving goal.
Having knowledge about savings and investments at a growing age will play a crucial role in lifelong money management.
Discussing financial health matters:
Start by communicating with your kids about simple money topics at home. You can also seek out opportunities in your daily activities to turn routine money transactions into teachable moments for your children. You can begin by teaching them essentials such as: earning, spending, saving, and donating.
Get them saving for college:
As your child enters high school, discuss college and the costs of tuition. This will teach your child how to invest financially in their future, increasing the likelihood of financial stability and success long-term. Discuss financial aid. Make sure your child understands the difference between free money and money that must be paid back.
Be a Role Model:
We try to teach our kids many life lessons while they are young and impressionable. However, the challenge is to be able to show them how to handle their money efficiently. Building good savings habits will definitely provide big dividends all the time in their lives. During their early years, our children closely observe us and the actions of other adults too! Therefore, try to be a real role model and have an explicit, open conversation about money.
As parents, we have aspirations for our children. We invest in their education so that they can get good jobs and live a secure life.
One of the aspirations must also include investing in teaching them money management so that they grow up to become financially independent adults.