Did you know, only 21 states require high school students to complete a personal finance course? This, according to a 2020 survey conducted by the Council for Economic Education, has increased by four states since its 2018 survey. Financial experts agree, having basic personal finance skills allows people to live less stressful and more secure lives. A happy, less stressful, and secure life is certainly something that we all want for our children.
As you begin your journey to teach them of the value of money, you could teach them about investing. Children may not need to know all there is to know about the best agriculture stocks right now, but a parent can teach them the basics and how to plan to invest later.
In this post, we will discuss five things parents can do to teach their children about money and better prep them for their financial futures.
Become a Pupil and a Teacher
“I recommend that parents take the time to teach their children, because the parent often learns even more,” wrote Robert Kiyosaki in his 1997 book Rich Dad, Poor Dad. Children learn from their parents. They see and adopt habits without us even realizing it. This applies to our financial habits as well. So, learn and adopt better habits. Easier said than done you say, but think of it as a teachable moment. As you go through the motions, take your children along with you. Explain the importance of the tools you employ and how they make life easier for your family.
All Fun and Games
It can be a chore to force-feed your kids information. Instead of shoveling loads of information at them, try to make learning fun. Play games based around finances—Monopoly and Life are popular examples. These games can explain mundane things like mortgages and property taxes. For younger children, play off of their active imaginations, maybe play a game or two of supermarket and sneak in tidbits about budgeting and how a shopping list saves time and money. Pick something that you know holds the interest of your children and teaching them about money will be a breeze.
Set Up an Allowance System
Instead of a traditional allowance where money is given for little to no effort on the child’s part, treat it like a payday. Make a chore chart or graph to show that money is finite and must be earned. You can help kids calculate earnings or potential earnings with jobs completed and even throw in some facts about taxes and deductions. This will not only teach your kids the value of hard work but will also instill in them an appreciation for the money that they are able to earn.
Reading is Essential
Everyone loves a good action or fairy tale book. But instead of having every storytime session be of the fantastical variety, throw in a dose of realism every now and then. With parents discovering the importance of teaching personal finance at young ages, there are plenty of child-friendly finance books to choose from. A simple Google search yields thousands of results. If you can’t find something to suit your needs, makes something up. Put a spin on classic fairy tales and make fond memories (involving money talk, of course) that your child is sure to remember.
Savings Goals and How to Spend
Show your kids how to save money, and how to spend money. One popular method that is noted by at least two renowned speakers, Dave Ramsey and Robert Kiyosaki, involve plastic see-through containers that act as accounts. Use labels like spending and saving to name the jars. Teach the importance of putting away a little money from earned income and the difference between wants and needs; wants often result in impulse buys, while needs are generally something vital like supplies for school. Allow the child to make deposits or withdrawals as they please, and, most importantly, make mistakes. We learn and grow the most from making mistakes. For every failed venture, be sure to explain what happened and why. Also, allow space for questions and reflection from your child as another vital part of the process.
Planning Wisely for Your Child’s Future
Teaching your kids about money can be a fun learning experience for you and your child. Forbes Magazine has quite a few articles on teaching personal finance to children. Remember, teaching financial literacy is wise planning for the future that can benefit your whole family. For more information on other ways to plan wisely for the future, check out this post.