By Kim Borwick
This article will help you understand what your children need to learn to become financially healthy adults.
There is no one-size-fits-all to helping children learn about money, as the best way to teach kids will vary depending on their age and financial literacy level. However, these general tips can get you started.
Sometimes parents try to protect their children from money-related topics. This can lead to problems later down the road. That’s one reason why it’s recommended that children learn early on the significance of money, and how to manage and use it wisely.
Young children
For younger kids, it’s important to start with the basics, such as explaining what money is and how it works. Help them understand the value of money by setting an example and showing them how to save and spend responsibly.
Some studies show that is better for kids between the ages of 3 to 5 to learn the cost of things that they want, like toys or certain snacks. This will help them begin to understand the concept of money and how far a dollar goes. Piggy banks can provide a tangible way to help your little one learn to set and meet goals and save for that coveted toy they desire.
Youngsters to tweens and teens
Between the ages of 6 to 14 is a suitable time to introduce the concept of a budget for household items and the items your kids want to buy. The regular trip to the grocery store is a good place to talk about staying within a budget. Your child can help you select items on the list by shopping by price and brand and comparing those against your grocery budget.
Older teens
As kids get older, you can gradually introduce more complex concepts such as investing, budgeting, and financial planning, and how to avoid common financial mistakes.
Beth Koblinger, best-selling author and financial journalist, cites an example of how a friend of hers used car shopping as an opportunity to teach his 10-year-old ‘smart ways to save, how to see through clever marketing, how to negotiate prices, and how to avoid the pitfalls of loans.’ Common experiences like car shopping can provide fertile learning opportunities for you and your child.
Teaching your teen about finances, including credit and debt, is a crucial step in helping them become responsible adults. Yet, conversations with teenagers about money can at times be rough, especially when they see their friends or people they know with the latest technology or designer clothes. It’s better to teach and guide your kids in the responsible way of using money when they’re young, so they develop positive habits they can build upon. By high school, teens should understand how to earn, save, and spend money carefully, especially before heading to college.
College-bound
Credit card companies have been known to target college students, so it’s a good idea to teach your teen about credit limits, how interest rates work, and the importance of building credit responsibly. This will help avoid the dangers of maxing out credit cards.
It’s also essential to understand the differences between student loans and scholarships, the risks of taking on too much debt, and how to build good credit. Taxes should also be included in the mix.
Teaching children about money is necessary because it’s unlikely that they will learn it in school. Financial literacy is not a common topic in high school or college classes. Actual saving and investing will be far more valuable than any app or online course. But, if you are looking for a quick start, then these apps might be worth your time: FamZoo, Revolut, Celebrity Calamity, and Savings Spree.
Teaching your children about money as they grow up will help them develop a strong financial foundation that will serve them well throughout their lives.
To find additional details about financial planning here.
Photo by Annie Spratt on Unsplash
