There is wisdom in trying to teach kids personal finance regardless of age because as parents, you are their first source of information. This is one of your most important roles in life as parents and something you need to take very seriously. You are raising the future generation and what they pick up from you is usually what sticks with them in the long run.
There are a lot of reasons to help them get their footing when it comes to their finances. It also helps that The Dispatch site share that legislators passed House Bill 924 requiring all high school students to take a course on personal finance. This is a great development but as parents, it is your job to be their first teachers in this field. Here are some ways you can be a great teacher for your children when it comes to money management.
They need to be financially independent in the future
There is no way around the fact that they have to be financially independent in the future. That is unless you are ready to get that knock or call in the middle of the night from your children asking for money. They could also decide that they will depend on you until they are older forcing them to stay at home even after college.
There is nothing wrong with helping your children every now and then. You do not stop being a parent full of love and wisdom just because they graduated from college. However, you need to teach kids personal finance so you can enjoy your own life. It also gives you the ability to see your children grow up into independent and strong-willed adults.
If you choose to support them all the way into your retirement, they will have a hard time adjusting to the real world. They may not find the will to look for a job and even if they do, there is a big chance that they may not be able to manage their finances well. This is why they need your guidance early on in life to help them carve their own path in the future.
Share your mistakes so they do not make them
There are a lot of ways to help teach kids personal finance and one of the most effective approaches is sharing your past financial mistakes. This can be a great talking point where you share some financial missteps you made in the past, what the consequences were, and how you got yourself out of that situation.
You can share your own struggles with your children and teach them what you got out of it. Did you have a hard time with your student loans when you graduated from college? Did you take up post-graduate studies and the loan amount piled up? Share with them the problems you encountered and how you had to make a lot of changes to get over them.
There is a big chance that they might not go through the same problems you had in the past but if in the rare chance that they do, they already have an idea what to do. They could also go through situations that could have some similarities with your financial challenges in the past. In these instances, they can still refer to what your experience was and gain wisdom from it.
It will lower their financial dependence on you
One of the biggest reasons why a lot of parents teach kids personal finance is because they want to lower financial dependence on them in the future. There are some children who are growing up believing their parents are banks they can take money out anytime. This is because they have gotten used to asking for money ever since they were small.
If you train them early and explain the mechanics of how money is earned and how it should be spent, they can understand it better. It can lower the chances of being asked for money from time to time which can put you back in your own goals. You might find the need to dip into your retirement fund or even emergency fund.
The problem is that when you find yourself in need of that money. You could be going through a rough patch and need some extra cash for a few months but you have given most of your emergency fund to your child. It could lead to depending on your credit cards and having to take on a big debt amount just to
How to teach kids personal finance early in life?
Now that you have an idea about some of the reasons why you have to teach your children how to manage money early on, here are a few approaches you can consider to help you achieve this goal.
Give them an allowance
There are several discussions about how parents should approach giving an allowance to children. Some prefer to just give an allowance outright to train children on how to manage money. Others choose to let them earn it through chores at home. The problem with this is that children would tend to grow up thinking that they should be rewarded with money for anything they do.
Whichever you believe in, giving children money of their own starts them off in the right path. A small allowance they have to save to buy something they want teaches them the value of saving money. When the time comes that they have to spend it, they learn the value of exchanging that money for an item. Then they have to start all over again in saving money to get what they want.
Let them manage a part of your budget
If you want to teach kids personal finance, you can give them a role in the way you manage your own household budget. They can be in charge of the little things in your budget making sure that they are monitored and paid on time. Think about your electricity at home and show them how much you pay a month and ask their help to monitor electrical use at home.
They can start closing lights at home when they are not in use or even unplugging devices when they are not turned on. Open up the idea of exploring the use of solar lights and have them put it up if they can. Once the bill comes in, show it to them so they can see the effects of their efforts. This can encourage them to do more and help the family save more.
Be a role model for them
It is a fact of life that what your children see you do has a lot more impact on what you tell them to do. If you always remind them to mind how they spend their money but you always overspend yourself, they will pick up on the latter. One effective way to teach kids personal finance early is to be a great example for them.
When you are out with your children doing the groceries, show them that you are looking over your list and sticking to it. You can even ask them to help you monitor or compare prices to see which product costs less. In the end, your goal is to make sure that you set a good example for your children so they can remember that as they grow up.
It might be tough to teach kids personal finance with everything you have to do but it is a rewarding role as a parent you need to take on. This will help your children manage their own money in the future and give you the chance to keep your finances intact as well.