Having open discussions about money and implementing lessons into children's life may go a long way toward creating financially healthy individuals.
Everyone wants their children to be successful and happy. It may be possible to do this by teaching them about personal finance and economics. In reality, a lack of education can have disastrous consequences. It can result in credit card and student loan debt, as well as living pay-check to pay-check and failing to save enough money for retirement.
Here are a few ways to educate your children about money:
Start the Conversation Early
Money can be a sensitive subject, making it awkward for some parents to talk to their kids about it. Surprisingly, teaching children about finances can begin when they are young as three or four years old.
Behaviour development is so much easier than behaviour modification as when kids are young, it’s so much easier to work with them – by the time kids get to high school, many of their behaviours become deeply ingrained.
A good example can be to give children opportunity to be comfortable with money – for instance at the cash register when making a payment, ask children to count money and give to the sales person and count back the change. Always make sure to get back the receipt incase an item needs to be returned.
Make it Relatable
A lesson must be age appropriate in order to be effective. Children as young as kindergarten are undoubtedly capable of grasping some of the most fundamental ideas, as long as they are taught properly. They should be taught to discuss in-store purchases and online shopping transactions along with preparing a budget and studying economic theories.
Learning the Long Game
Learning to be money smart is a lifelong lesson and experts say goal-setting and delayed gratification is a large part of becoming financially literate. This includes letting children make mistakes, for instance- it’s better for them to regret choosing the wrong $5 toy with allowance money, a lesson most kids will remember than buying the wrong car when they’re older.
The most important thing that I think we can teach our kids is a sense of self-sufficiency, meaning that they believe they can set a goal and achieve it. And that is the crux of financial literacy education as later on, they will set their financial goals, map out a path to get there, budget money, make trade-offs, set aside savings and do things that give them the confidence that they can achieve their goals.
Creating Positive Outcomes
By involving yourself in your children's financial education from a young age, you will not only supplement their school-based education, but you will also assist them transition into early adulthood with a better knowledge of how to handle their own finances and prevent a lifetime of debt.
As parents, we want to raise our kids to be happy, healthy and financially successful. We know that when young people have access to this information and are given financial literacy education, they will have fewer instances of debt, they will have more instances of financial success and there will be less need to rely on social services and economic support.