Are your kids prepared to handle their finances independently in the future? Financial literacy is an important part of becoming a successful and responsible adult, so it’s a good idea to start educating your children early so they can grow up with a healthy understanding of money.
Financial literacy can provide your children with an understanding of taxes, savings, bills, retirement, budgeting, debt, and more. Money isn’t always the most interesting topic to children, but there are ways to simplify the concept and make learning fun.
These are some great places to start:
Typically, your child’s main experiences with money will come from you. To introduce them to basic concepts of spending, try playing money-based board games like Life or Monopoly to make things fun! As they get older and into school, take them shopping with you and be transparent about your budget. Get them to help you keep track of your purchases with a calculator to show them how cost accumulates. Grade school is also a good time to start to give your kids an allowance for chores they do around the house to get them into the habit of managing their money.
Teach Spending Habits
Can your kids distinguish between wants and needs? This is an important step to teach them, and can tie into other concepts like goods and services, credit, debt, budgeting, and more. This is a good time to explain the importance of not spending more than you earn. If your children make $10 a week in allowance, they have to decide whether they want to spend that money on candy or save it up for that video game release they’re looking forward to.
Which leads us to our next point.
If your child has something they want, encourage them to set aside money for it. If you can, create visible savings so that your child can see how their money grows over time. This can be in a piggy bank, glass jar, or even a bank account that you both look at weekly. Having a countdown can add some fun and help make the weeks of saving seem more attainable too!
Have questions about improving your own or your children’s financial literacy? Get in touch with us at Encompass Credit Union!