As a parent, it can feel like there are endless ways to help your child succeed in life. From academics to social skills, many factors will help your child grow into an adult with the tools they need to thrive. We don’t often think about personal finance when it comes to our kids until they ask you for money or you see them blow $40 on nothing at the gas station. Money management doesn’t have to be complicated. This article will give you some great tips for teaching your kids about personal finance and how money works. It’s helpful to have guidance if you are unsure how best to approach this topic with your child.
Why It’s Important To Teach Kids About Personal Finance
It’s easy to get wrapped up in your day-to-day life and forget that your children are taking in everything around them. When you’re busy trying to meet a deadline or get the kids to their next activity, it can be easy to overlook the importance of teaching your children about money and financial management. Teaching your kids about money management is essential because it will help them prepare for the future. Whether they decide to go to college, start a career, or jump straight into the workforce, they’ll be able to understand the financial responsibilities that come with these choices. By teaching your children about money management and financial planning, you’ll help them avoid unnecessary debt and make responsible choices with their money. Additionally, by teaching your children about money and how it works, you can help them become financially independent and prepared for the future.
Start Early and Be Authentic
One of the worst things you can do when teaching your children about personal finance is to push the subject off for years and years. Suppose you wait until your child is in their late teens to talk about money management. In that case, you may find your child feeling overwhelmed and confused as to why they should care about something they have years to tackle. Instead, try to introduce this topic as soon as possible. If your child asks why they have to set a certain amount of money aside every month, you mustn’t dismiss their question. Instead, try to find a way to work the topic of personal finance into the conversation and be honest with your child. Children are very perceptive and can often pick up on when you’re dismissive or disingenuous.
The Basics Of Personal Finance
If you’re reading this and wondering where to begin regarding personal finance, don’t worry—it’s not as complicated as it sounds. Personal finance is the total of all your financial decisions, from how you earn money to how you choose to spend it and save it. Think of personal finance as a pie chart—many parts add to the bigger picture. So, instead of explaining them all at once, focus on a few main points. For example, you can break down personal finance into the following categories: Income is how you make money through a job or another type of financial assistance. – Expenses: This is everything you spend on, from tithing and charitable giving to groceries to bills to saving for investments. – Savings: This is money you set aside for future expenses, such as a car, a house, or retirement. – Debt: This is the amount you owe for financial assistance you’ve already used, such as student loans or credit card debt.
Help Your Child Manage Their Own Money By Teaching Them About Budgeting
As your child gets older, they’re likely to start gaining their source of income. Instead of letting your child keep their money and spending it however they please, try to get them into budgeting. You can help your child set up a budget by breaking down their monthly income and expenses. It might sound like a lot of responsibility for a child, but budgeting is a great way to ensure your child is responsible with their money. Budgeting will also help your child understand how difficult it can be to make ends meet if they haven’t planned for their expenses. When it comes to budgeting with your child, you’ll want to ensure that you’re honest and authentic with your child. Explain that there might be months when money is tight, and they might have to sacrifice how they spend their money. Please help your child understand that this is normal and part of being financially responsible.
Set The Right Example
As important as the tips above are, nothing will help your child understand personal finance more than the examples you’re setting for them. Suppose your child sees you’re careful with your money. They see you writing your tithe check first each week, paying your bills on time, and avoiding unnecessary debt. In that case, they’ll likely follow your example. However, suppose your child sees you going into debt frequently and spending money you don’t have. In that case, they’ll likely pursue your bad example. You must set a good example for your child, especially if you have a financial debt to pay off. You don’t have to live a life of deprivation and only buy used clothes and run-down cars. Instead, it means you have to be smart with your money, live within your means, and avoid unnecessary debt.
The road to adulthood can be challenging for anyone. Still, it can be especially so for young people just starting to earn money and make financial decisions for themselves for the first time. Parents must teach their children about money and financial management from a young age. There are many different ways to do this, from giving children chores that teach them how to manage their time to helping them set up a budget for their spending.
There are plenty of apps and sites that can help you:
Personal Finance Lab Financial Literacy Games for Students
Savings Accounts (check today’s rates)
Free Tools Financial tools from Ramsey Solutions
There’s no one-size-fits-all approach to teaching kids about money. Tailor your strategy based on your child’s interests and developmental stage.