Young Money: Tips for Teaching Your Kids Basic Financial Literacy
When you’re a kid, the last thing on your mind is money. But learning the basics of personal financial management at a young age can set you up for a lifetime of responsible earning and smart saving and provide you with an advantage when it comes to investing. Here are a few tips from Natel Financial for introducing your kids to the basics of financial literacy.
One of the quickest and most effective methods for helping a child learn about money is simply to give them some of their own to play with. The act of receiving a regular amount and using this to either spend or save can prove formative for younger children. There is often debate about how much is suitable, so take some time to read the expert advice before you commit to a number.
Some parents feel that it’s possible to foster a work ethic in their kids by encouraging them to work for their allowance. Simple chores such as cleaning up their room, washing up, sweeping the driveway, or even achieving high grades can all be good incentives. Again, working for allowance is a point of contention, and it’s worth reading arguments from both sides before you make a final decision on whether to use this strategy.
You can often foster curiosity and an early understanding of finance by taking your kids with you to complete basic monetary tasks. Examples of this could include withdrawing cash from the bank, depositing a check, or even taking out a loan. It’s best to limit their involvement to activities that you know will be quick and easy. This way, you’ll avoid boredom and ensure the lessons are simple.
For many adults, the concept of saving or investing money remains foreign. It’s important, then, to foster this habit early on and encourage prudence about where to put your hard-earned cash. You can spark an interest in the subject with your child by helping them to set up a kids’ savings account with one of the major banks.
Synchrony Bank explains that there are multiple schemes that will be easy to explain and that they can personally partake in. This provides an opportunity to explain the process of saving or investing as they see their balance grow over time.
Although it may seem complicated, home ownership is a subject your child should learn about earlier rather than later. Owning a property can be an excellent way to build up your assets and create financial security. Help them to understand the strength of their financial position and what they can comfortably afford without being house poor, and also why it’s important to get pre-approved and other facets of the home-buying process.
There should be no limits to what your child believes they can achieve. Introducing them to the concept of entrepreneurship will help to break down the barriers that many of us establish for ourselves when it comes to starting a business. As a starting point, you could explain to them how companies work and how they are usually funded (including the basics of angel investment, microloans, and crowdfunding).
Financial literacy is an incredible advantage when it comes to navigating adult life. If you’re able to set the foundations for this understanding now, then your kids and their future families are likely to reap the rewards for years to come. Be open and honest with your children about everyday financial processes. If you put those situations within kid-friendly limitations, your children will begin understanding and appreciating the complexities of money in a way that will set them up for success later in life.
If you are looking for ways to strengthen your financial position or to secure insurance benefits, contact Natel Financial today!