Finances can be tricky for adults of any age, let alone when it comes time to teaching your children about money! But don’t worry, making sure your kids have a good clear and basic understanding of money can help them get set for success no matter what career they choose!
Boundaries
Obviously, one clear goal you want children to understand about money is that it does not grow on trees, or magically appear when they want it. Money is a hard object despite the ability to use credit and debit cards, or even paying by your phone. It can be too easy to fall into that pace of money lasts forever when you do not have to physically hand it over, but just use a card or scan or a barcode. To help kids understand this, it is always a good idea to start out with them getting physical cash instead. Have them earn their allowance in change and dollar bills to understand the concept of money. This way they can see the money growing right in front of their eyes.
This is an ideal set up for when they are younger, and as they age and reach double digits, then you can start talking about cards and banking accounts. There are a few companies out there already that are marketing bank accounts for younger kids, and it can help show them the importance of saving and how their account works. Make sure to show them how to use the debit card and how their account is storing their money. If they are interested in a savings account, make sure to give them a run down of how that works and even show them how to automatically deposit money to help their savings grow without too much effort.
Save, Save, Save
And at the end of the day, another major lesson for every child is the importance of saving. It is hard to think about retirement or even buying a house down the road when you are only 12 years old, so make sure you really instill a good sense of savings into your child’s mind. Make them save up their own money to buy the next game they want so they have to see how much effort it can take. When they become teens, make sure to talk a little about savings plans at their work, such as a 401k or saving for bigger purchases, such as their first car. Saving does not always have to be about big, expensive purchases or even retirement, but just as a means of having an emergency fund available in case something happens. Being prepared also translates into finances, so make sure your kid understands every penny makes a difference!
Katie Kyzivat