It’s never too early to start teaching your kids about personal finance. Teaching children money management skills at a young age allows them to build a solid foundation of financial literacy. When children master concepts like budgeting, saving, and debt while the stakes are still relatively low, they have the tools to make wise financial decisions as they grow older.
If you’re a parent, you may want to teach your children personal finance skills but not know where to begin. How can you get your kids started down the path toward financial independence? Here are some tips to help you get started:
1. Lead by Example
Financial education begins at home. You can show your kids the value of saving and budgeting by doing so yourself. As you go about your daily money management tasks, have conversations with your children about your checking and savings accounts, household expenses, and setting a budget. This way, your kids can learn by experience and see financial concepts in action.
Your regular trip to the grocery store is an excellent place to teach early financial lessons. When your kids tag along for a shopping trip, use the opportunity to reinforce lessons about positive financial behaviors, like sticking to your budget. The grocery store is also a good environment to discuss financial habits to avoid, such as overspending and impulse buying. By involving your kids in the practical decision-making of a shopping trip, you can teach them how financial concepts play out in the real world.
2. Set Goals
Whether it’s a new bike, a videogame, designer sneakers, or an outing with friends, eventually, your kid will want to buy something for themselves. At this point, you can help them set smart savings goals tied to specific dates and monetary amounts.
Rather than simply offering money whenever your child asks, proactively offer opportunities for them to earn money by contributing around the house. This will provide them with valuable experience tracking income and expenses, in addition to inspiring a sense of fulfillment and achievement.
Once your kids have their own money to spend, you can help them create a budget to track their savings goals and avoid overspending. In addition, you can buy them a piggy bank or get a clear jar to keep their savings secure.
3. Use Technology
There are a growing number of websites and mobile apps designed specifically to help kids keep track of their money, learn valuable personal finance tips, and build a genuine appreciation for budgeting and saving. Most of these apps also give parents the ability to view and administer their kids’ funds, enablingparents and kids to work in tandem to foster good financial habits.
Kids’ finance apps range from virtual banks that help young users manage their funds and save for purchases to allowance management tools that let parents customize a schedule of chores and corresponding monetary rewards. Many apps combine these features, with some even providing kids with their own personalized debit cards.
Personal finance is a vital life skill and a critical part of being a self-sufficient adult. Yet, many parents struggle to teach their children about financial literacy. If you want to raise financially savvy children, start sharing lessons early, and you’ll instill habits that last a lifetime.