As parents, we are tasked with teaching our children valuable life lessons. Amongst them is money management. Talking about money is not always the easiest conversation to have, but this topic is one of the most important. Money continues to be a leading cause of stress amongst Americans, so we wanted to share a few tips to help you educate your children about money and financial management.
Make It A Game
One of the greatest ways to teach your children about money is to have them absorb the importance of money, without them even knowing it. Consider infusing their games with money and math to make the process fun and enjoyable. You will quickly find that they will be begging to play without even realizing what they are doing is educational. There are many games on the market such as board games (Monopoly and The Game of Life) and online simulation games. You can play mental math games, or even get creative and make your own. It’s never too early to start and the younger you can get your children comfortable with numbers, the better.
Save From The Start
Whenever your children receive gifts for birthdays, holidays or other events, use it as an opportunity to teach them about savings. Starting from a young age, have your children save a percentage of the monetary gifts they receive to introduce the concept of savings. Over time, their savings will grow and there will be an opportunity to enhance their understanding of what money can buy you when you’ve saved a certain amount.
Introduce Investing At An Early Age
If you have money invested in stocks invite your children to follow along. You can purchase stocks in companies that align with their interests to keep them focused and curious to track their performance. If they are interested in sports, consider stock in a sportswear company. If they love to travel, consider hotel or airline stocks. When it comes time for your children to invest their own money, they will feel more confident and be better prepared to do so.
Money Lessons During High School Years
When your kids are in high school, it may be time to allow your kids to have their own credit card, but one with a lower limit such as $500. Start having them get used to buying and paying for certain things in order to build good habits. It’s a great way to start educating about money management and proper budgeting.
Involvement in Family Finances
When you feel your kids are at an appropriate age to be open with them about your finances, invite them to witness the process of purchasing bigger ticket items. If you are buying a house, have them attend the closing. If you are buying a car, include them in the negotiations. At each step you will be able to explain the process and teach them about the industry terms. You will also be working with other people such as title companies who can share their wisdom. It will help them to better understand your family’s finances and prepare them to manage their own, when the time comes.
Financial Management Accounts
If your children are old enough to be employed, have them set up online financial management accounts through companies such as Mint or Quicken. This will enable them to track their expenses and their income as well as budget for their needs. Use this as an opportunity to introduce concepts such as taxes and social security to broaden their understanding.
Access Industry Resources
Don’t be afraid to turn to outside resources to help expand your children’s knowledge about money. Having your children read weekly articles on different money-related topics is a great way to do so. When they complete each article, have an open conversation with them about their key takeaways and answer any follow up questions they may have.
When it comes to understanding money management, knowledge is key. Opening up about finances at a very early age is the best way to ensure your children have a good grasp on the concept. You can start simply with building an understanding of math and numbers, and expand to more complex topics such as budgeting and taxes over time. Do what is right for your family and incorporate more involved topics at whatever age you feel is appropriate. By teaching your kids about money you can to help alleviate stress early on in their lives. Trost Financial Consulting is also available to help with your, and your family’s, monetary education.
