Having financially prepared kids is one of your goals in life as a parent. One of the main reasons why you aim to impart valuable money lessons to your children is because you know hot it feels. You know how it is to be in debt and squeezing in every inch of your income to make ends meet. There is also a good chance that you know how it is to pay off student loans for your college education.
All these plus present and everyday financial challenges could prompt you to prepare your children as much as you can in managing their finances. As a parent, you only want what is best for your children. This is why teaching and preparing them financially is on top of your list. This is all the more important as financial literacy is one of the problems of America’s youth.
As you endeavor to impart budgeting and overall financial skills to your children, one benefit it has is that they get to manage problems better as adults. Just like how CNET.com shared that over 100,000 people are now at risk of identity theft due to Free Application for Federal Student Aid or FAFSA filing. Thieves were able to mine personal details that can be used against innocent people.
If your children know how to protect themselves, they would know what to to do as well as the negative implications of inaction. Thinking they are safe is the number one mistake they could make. They would need to check their credit reports together with yours as a parent just to be safe. These are just some of the things they would think of when they have a good handle on financial basics. Here are a few more things to look into to have financially prepared kids.
Financially prepared kids need to know the basics
It is your responsibility as a parent to bring up your child to a certain level of financial preparedness. In order to do this, you need to teach them the basics. The first thing on your mind could be that small piggy bank that they put money into to save. Nevermind that they ask you for loose change to put in it. The important thing is to get them started and develop the habit of putting money into it. You can later look at giving them chores so they get to earn money around the house.
Once they reach a certain age, you might want to teach them more things about finances. If you intend to teach them about taxes, USNews.com explains that you can point out to playgrounds or parks and even hospitals. Look for places they regularly interact with and explain how they are built through tax payments. The idea is to help them understand by explaining things through methods they will understand.
Are they showing signs of being entitled
One of the things you have to closely guard against is instilling a sense of entitlement on your children. In an effort to have financially prepared kids, you might be coddling them too much that. This can lead to your children believing they can have anything they want simply because they want it. You might not notice it but you could be giving them things they want because they want it.
There is nothing wrong with a new toy every now and then. However, buying them a toy simply because they would not stop asking for it while you are in the mall might not be helping them. Apart from letting them know they can cry their way to a new toy, the now believe that they can have whatever they want in life.
Create an environment that advocates hard work
One of the ways to prevent this as well as have financially prepared kids is to make them understand how hard work comes into the picture. Make them understand that your wallet does not contain a never-ending amount of cash or that the credit card is a magic pay-for-all plastic. It would also be a good idea to let them know that the ATM machine doesn’t just dispense money anytime you ask for one.
Explain why you have to go to the office every morning and why you need to put in a few hours of work at home as well. When they have chores, make them do it properly every time all the time. If they have a project for school, guide and help them but make them do it. They get to appreciate and develop the attitude for hard work.
Help them connect hard work to earning money
As they now know what hard work is, one step to have financially prepared kids is to help them connect hoard work with earning money. The harder and smarter they work, the more they will earn money. You can start with household chores. The more they finish and get the chores done, the more you can pay them.
The same with that lemonade stand, if they put in the hard work, they get to earn money from their sales. When they start to look for part-time summer jobs, they can carry this attitude with them in order to do well. They understand that to earn money, they need to invest and put in an equal amount of hard work. This helps them appreciate their income and would think twice about using it for frivolous purchases.
Let them make their own mistakes
No matter how much you planning you put into have financially prepared kids, they will make mistakes. This is for the simple reason that no one is perfect. Even you as parents, you will make budget mistakes along the way. The idea is to let your children make financial mistakes and let them process how they got to that situation.
You can guide them along the way in trying to figure out their mistake. As they understand this, they can then look for ways on how to solve them. Later on, help them figure out how to prevent the same mistake from happening again. This approach can help them deal with challenges in the future and you get to have financially prepared kids.
Make use of technology to connect with your children
Technology can help manage personal finance and this is one way you can connect with your children. Technology has grown by leaps and bounds and no one understands it better than today’s generation. Your children are more in tune with technology than you were a few years ago and that can be an advantage in helping them learn about money management.
You can use videos and colorful illustrations to make them understand about money. For much older children, you can both look into fun financial applications that can help them appreciate the need to manage their funds. For older kids, help them open and navigate through their bank accounts using online banking.
If you are looking to build financially prepared kids, you need to understand that you have a big role to play as a parent. QZ.com shares that in your effort to raise your children, stability will play a big role. It has to remain steady as life around them changes every day. When you are teaching them about money, you need to keep at it and instill the same lessons and messages all throughout.