We may understand the basics of our finances and planning for our retirement, but we also need to make sure we’re teaching our kids about money. Too many parents don’t explain financial planning to their kids early enough, so they don’t understand how it all works and can get into trouble. Most schools don’t have financial literacy programs, so it’s up to us and according to a financial adviser, these tips can help us pass on financial skills and knowledge to our kids.
- Capture teachable moments - You can start teaching your kids about money while they’re still young. Have little ones hand the cashier the bills and talk about the cost and the change you get back. Take kids to the bank and introduce the idea of checking and savings accounts as you explain what the tellers are doing. And let your kiddo watch you pay monthly bills online.
- Create a kid-friendly savings account - After you start giving your child an allowance for something they’ve done, like chores or getting good grades, help them create a weekly or monthly savings plan and match a percentage as they save so you can teach them the basics about how to help their money grow.
- Don’t be afraid to let them struggle a bit - Parents want to provide the best life for their kids, but when it comes to finances, the best thing to give them isn’t money, it’s the tools to become financially successful. Teaching them how to save includes letting them make mistakes so they can learn poor decisions have consequences.
- Remind earners about expenses - If your youngster turns out to be a little entrepreneur, teach them there are always expenses for a job, from babysitting to washing cars. Explain how they have to cover their business expenses to help them learn and so you’re not paying for their ventures.
- Retirement ready - Teaching your kids about finances while they’re young makes them less likely to form bad financial habits that could lead to trouble later in life.