How to get your kids interested in personal finance
It’s great to learn smart money habits at a young age – and that’s where you as a parent come in.
- The financial habits your children develop may carry them into adulthood.
- If you’re eager to get your kids on a solid path, it helps to give them money to manage, follow a budget, and work toward different goals.
There’s a reason lawmakers have pushed for financial education to be integrated into the classroom. Teaching kids how to manage their money when they’re young could help them avoid financial pitfalls later in life.
If you want to put your kids on a solid financial path, it pays to talk about money at a young age. Here are some ways to get your kids interested and educated in personal finance.
1. Give them an allowance to manage
Once your kids are old enough to understand the concept of money and the amount of various bills and coins, it pays to set them up with an allowance. This age can vary from child to child, but often children are ready for an allowance around the second year. This allowance doesn’t have to be large – it can be a dollar a week if that’s all you’re looking to part with. The point, however, is to then put the responsibility on them to make the most of that money.
You’ll want to consider the benefits of spending their allowance versus saving it. In fact, it’s a good idea to open a savings account for each of your children, so if they want to save their money safely, they can.
Once your kids are a bit older (say, in third or fourth grade), you can even revisit the concept of interest and help your kids track how much they’re earning from their savings. Granted, these days it might not be much, but it’s still a good concept to teach.
2. Show them what budgeting means
One of the reasons so many adults struggle with debt is because they don’t stick to a budget. It is therefore important that your children adopt this habit early.
You can accomplish this in different ways. First, you can create a mock budget to give your kids an idea of what a family’s expenses might look like. Or, if your kids are older (you might want to wait until around fourth or fifth grade for this one), you can split your actual household budget with them. This way they can see what your different bills cost and maybe appreciate the luxuries you are giving them.
3. Work together towards goals
Adopting the savings mindset is not easy, neither for adults nor for children. But if you show your children what they have to gain by becoming good savers, they may be more willing to accept the idea.
It pays to see if you can work together towards a specific financial goal by asking your children to pool their pocket money and asking the adults in your household to cut back on their leisure expenses for additional savings. This goal can range from a family night at the movies to something loftier, like a trip to Disney World. The key is to work together and find strategies for accumulating savings – strategies that your kids will hopefully latch onto and use later in life.
Teaching your kids about personal finance could set them up for success as adults. Use these tactics to start the process. Hopefully they’ll learn a lot and you’ll even have fun along the way.
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