By Laura Pearson
Teaching children how to be financially responsible is a big job, but if you start early, you can give them the tools they need to make good decisions for the rest of their lives. These days, there are many resources available that will help you and your child tackle financial literacy – from board games to phone software to online learning tools. Not only that, you can work in lessons on your own while you’re grocery shopping or setting up an allowance.
Keeping the conversation about money open with your kids is a great way to show them real-life examples, especially when you’re about to make a big purchase, such as a home. Talk to your kids about the process of home-buying and why it’s so beneficial for a long-term financial plan.
Include Your Children in the Process
When it comes to buying a house, including the entire family in the process will open up the conversation about what goes into financing, how to build up good credit and create some security for the future, and how to handle buying and selling according to what the market is like.
Talk to older kids about how the market either favors buyers or sellers and how the local economy affects a seller’s ability to attract potential buyers. Other factors include the season, how many homes are currently for sale in a given area, and current interest rates. Because there are so many details that go into buying or selling a home, involving your kids in the process now will help them understand it a bit better when they’re ready to do so on their own.
Let Them Shop with You
Handling big financial decisions as a family—such as buying a home—is a great way to teach young people about how it all works, but you can do it on a smaller scale as well. Going grocery shopping for the week is an excellent opportunity to teach your kids about the importance of a budget and how to stick to it, so write out a list and allow them to help you figure out how to plan for meals within the amount you want to spend. This real-life experience is invaluable for kids of many different ages.
Look for Fun, Money-Related Games
Another way to get in real-life experience with finances is to find cash-related games your kids will enjoy, such as Monopoly, Pay Day, or The Game Of Life, and play them as a family. You can also use real money and play your own games at home, allowing your child to become a banker or business owner who must give you change after a “purchase.” Talk to your kids about sales tax and how to plan for purchases, especially if they’re old enough to receive an allowance.
Let Them Take Responsibility with Credit
It can be daunting to hand over financial responsibility to your children, but setting up an allowance offers a great learning opportunity where saving and spending are concerned. You might even consider looking for a kid-friendly credit or debit card that allows you to load a certain amount, or setting up a checking or savings account in your child’s name. Additionally, you can use this opportunity to teach your children about credit scores and reports, how they work, and the importance of maintaining a good score — which can help you when it’s time to purchase that new home. This type of financial literacy is crucial to learn as kids get older, but starting early will help them see the value of money now.
Guide Them Through Long-Term Planning
As your kids age, it’s important to guide them through the process of making long-term plans and executing them. Having a sound financial plan is important for any path in life, but if your child has college aspirations, they need a sound plan for that as well. Begin the process of developing those plans with your children as they enter high school, and help them adjust as necessary through graduation and beyond.
Teach Them About Starting a Business
When teaching your kids about starting a new company, there are a few key steps that you should focus on. The first is to help them write a solid business plan. This should include information on their target audience, their marketing strategies, and their budgetary needs for things like supplies and startup fees. It’s also important to discuss the importance of networking and connecting with other entrepreneurs, as this can be a valuable way to gain support and advice as they start out in the world of business. Finally, you should work with your child to identify any potential roadblocks or challenges that they might encounter along the way.
Teaching young people how to handle money and credit is a process that will help everyone in your family learn about the importance of being responsible. Utilize online resources when possible, help them develop long-term plans, teach them about starting a business, and keep the conversation about money open so you can answer any questions your children have.
Empowered Flower Girl strives to help positively strengthen the relationships between young people and those who care about them. Be sure to spend some time exploring the site to learn more about what we do.
Laura Pearson, of Edutude, is passionate about teaching the younger generation. Edutude was built to share resources on how to keep children engaged and in love with learning.