Start teaching your children financial education today
It is never too early to start teaching financial education to your kids. About 1 in 5 children in the U.S. don’t meet baseline levels for age appropriate financial literacy proficiency. Choosing one day a week to focus on basic financial concepts like goal setting, budgeting, managing spending, and saving will help your kids grow up smart about money. There are many fun ways to teach financial education skills that will help them as they grow and especially once they go off to college. Here are steps that will help you talk about finances throughout the years.
It is good to start teaching kids early what money is and how it works. You’ll want to explain that people work to get money in order to buy things. For example, let them run a lemonade stand. It will teach them about working to make money. Use money to help them learn how to count. If they like playing store give them a few dollars to teach them that if they don’t have enough money to buy an item they aren’t able to get it.
Earning an allowance for extra help around the house can help kids learn new financial skills like goal setting and budgeting to achieve a set goal. Don’t forget to remind your kids of all the different demands for their income. Practice by labeling three containers to divide their money for savings, sharing, and spending can bring this lesson home very quickly. Plus, when going to a store, if they want to purchase something they should be able to use the ‘spending’ portion of their money instead of relying on you to buy it. This will encourage them to consider if this is the best use of their limited funds and worth the money or not. Playing games like Monopoly® will be both fun and educational! It teaches financial concepts like managing cash, saving, and prioritizing.
They are now old enough to get a job and learn the value of hard work. Have them decide on a big item that they want to save for. Then help them determine how much they will need to earn to meet their goal and how long it will take to earn that amount. Open up a checking or savings account into which they can deposit their income. Try not to hover. Now is the time to make financial mistakes and learn what it takes to overcome financial mistakes before they are out on their own. They will be able to learn from their experiences and remember for the future. Help them understand upcoming money issues as they transition to independence like cost of college, managing student loans post-graduation, credit cards, credit reports and scores.
The benefits are endless when teaching your children financial literacy. It will give them an advantages in each step of their lives and decrease the possibilities of financial disasters.
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