When it comes to talking about money, every family has their own philosophy. It’s possible that your own parents avoided the topic altogether. However, the truth is that your relationship with money starts during childhood.
This is why it’s important to teach your children financial literacy from a young age.
Being open about financial wellness and encouraging healthy spending habits will set your kids up for success. Here are some tips for teaching personal finance for kids.
Be Open About Money
Money is a taboo topic in many households. But if you steer clear of the subject, your kids might develop a shame or avoidance mindset around their finances. Remember, money is a central and normal part of life.
Discuss spending, saving, and bills with your children. As they get older, you might introduce topics like saving for retirement. Exposure to these types of subjects will give them a leg up on their finances as they enter adulthood.
Lead by Example
Again, children get their money mindsets from their parents. If you’re careless with your spending, your children might be too. Your children’s financial futures are just one of the many reasons to stick to your budget.
Parents can introduce their kids to healthy spending habits by distinguishing basic needs from fun indulgences. And if you’re saving for a big purchase, talk to your kids about that process. These small conversations will have a big impact.
Pay an Allowance
Encouraging your children to earn their own money is a great way to practice financial literacy. So, consider offering your kids an allowance. Talk to your child about which chores they can complete in exchange for a weekly sum of money. This system will help your kids better manage their money, while encouraging them to contribute time to the family as a whole.
Talk About Saving
Once your kids start earning an allowance, they might be eager to buy the latest and greatest toy. This is an opportunity to learn about saving. Sit with your child and talk about what they might want to save for, and make a plan for putting the money away each week.
If you have young kids, you might simply stash this money in an envelope. However, parents can consider opening a checking or savings account for an older child.
Go in Depth With Teens
Parents of younger kids should stick with the basics of earning, spending, and saving. But once your children become teenagers, it’s time to go more in depth. Remember, kids don’t always learn about investing or saving for retirement in school. It’s your job to introduce these topics to your teen before they enter the workforce. Chances are, your child will thank you once they start saving for retirement at a younger age than most.
As a parent, you make decisions with your family’s well being in mind. Financial decisions are no exception. The financial advisors at Second Opinion Partners are here to guide you through life’s decisions and transitions. Whether you’re experiencing divorce or approaching retirement, we’re here to support you. Contact us today to schedule an appointment with one of our knowledgeable partners.