It is the chief responsibility of parents to prepare their kids to lead an independent life with no personal finance slips. With young adults struggling to achieve financial freedom from their parents, today it has become all the more important for children to learn personal finance rules and money management skills. Research has revealed that money habits actually are formed and developed at a young age and parents are supposed to be the greatest influence on a kid’s money habits and attitudes. You could start talking about cash and coins with your four-year-old child while you could introduce your eight-year-old child to the concept of money and its electronic forms.
As per https://www.forbes.com, it is quite surprising that schools do not impart money lessons to children given how critical financial skills are to successfully navigate life in the right direction. However, as a parent, you could make your children money-smart from a very early age. In the United States, people owe $1.1 trillion in terms of student loans and $845 billion in terms of credit card loans. All these statistics demonstrate the fact that American adults do not have a sound knowledge of money. It is, therefore, important to help the kids become money-savvy so that they avoid the mistakes made by their parents.
Personal finance management could be extremely challenging, hence, here are some personal finance rules created by financial experts that could help parents in navigating financial conversations with their kids and teaching various personal finance tricks to their children.
Focus on Inspiring Effective Ways of Earning Money
Encouraging your children to help you with chores for some money is a fantastic way of teaching them the fundamental concept of earning some money in return for some work or service. Weeding the garden, cleaning the house, washing the car or any other work that parents would wish to assign and pay a reasonable sum in return for the favor. This way, your kids could learn that money is essentially earned.
Entrepreneurship is also something that your children could learn right from an early age. It could be simply starting a lemonade stand during the summertime, imparting entrepreneurial skill and inculcating entrepreneurial spirit could be a fantastic way of teaching your kids about money. Motivate your children by telling them about the success stories of young entrepreneurs. They could start by selling their sports equipment, clothing, or toys they do not use anymore at any local consignment shop or eBay. You could encourage your kids by helping them in setting up a relevant website for showcasing their unique creations if they are deeply into art. If your kids are good at animation or coding, help them find an appropriate market so that they could start earning at an early age and learn to value money.
Encourage Good Goal-Setting Skills
It is important to teach your kids about the importance of setting goals and achieving them whether in terms of your career or business or simply personal finance goals. You could ask your kids what they are planning to do with whatever money they earn. This could be treated as an ongoing discussion and this sort of conversation would compel your child to think about aspirations and goals. Studies have revealed that individuals who set goals seem to be more successful in life. Moreover, it is a fabulous habit that you could introduce for increasing the possibility of success by helping your children set realistic but specific goals and objectives.
Teach Them to Spend Money Smartly
Your children are naturally not aware of the most effective ways of getting the maximum value of their dollar. For example, your kid may wish to purchase a video game but he may not have any idea of the fact that prices would probably go down post the holiday season. You could tell them about using coupon codes, inform them about holiday sales, or even tell them how they could probably save some money by opting for cheaper generic products instead of branded products. Make your child realize the best times for making a purchase. All this information would go a long way in teaching your child the art of spending smartly in everyday life.
Provide Tips & Tricks on Spending Judiciously
Everyone could be taught to value their money and avoid squandering it. If your teenager is in the habit of drinking coffee, you could suggest cutting back on his coffee purchases instead encourage him to get into the habit of enjoying coffee at home every day. Ask him to consider how long he had to work to earn an amount required to pay for what he wants. He needs to ask himself whether it is worth it. He needs to get into the habit of converting prices into the number of hours worked to determine the real worth of a product before making the actual purchase. Your child must maintain meticulously a record of everything he spends so that he could always sit back and evaluate if he would like to modify anything regarding his spending style or habits.
Explain the Basics of Saving
Your kids may want to use all their gift money immediately to buy something. Children get a lot of gift money these days for holidays and birthdays. However, you could tell them to try and make the money last all year to save for larger purchases. Your children could be receptive to your idea of saving all the money received as a gift or earned until they have enough money to make a bigger buy. You could share the cost along with them or they could buy whatever they want on their own. This way, your children could learn to make better saving and spending decisions.
Help them Track their Spending
For determining ways to save and achieve their goals, kids must precisely know their regular expenditures. You could successfully teach your kids about tracking their spending with the use of cutting-edge technology. For example, older kids could use a spreadsheet and monitor the changes in real-time. However, children of all ages could enjoy using some of the relevant financial apps for gaining practical experience.
It Pays to Educate Your Kids about Credit Concepts
There is absolutely nothing intrinsically wrong about using credit. Many of you would need some credit for buying your home and for college education despite scholarships and grants. Credit cards could be very useful and convenient. They could be used as effective financial tools for keeping track of all spending. Moreover, you could enjoy the advantage of earning rewards. However, your children must be taught the importance of paying off the outstanding dues religiously on time every month to avoid accumulating any debts. Young adults should browse through National debt relief programs to learn more about debts and effective solutions.
Help them to Start Basic Investing
It is important to teach investing skills earliest possible to your children. Your children must be taught about the importance of money and fundamental investment principles. They could be encouraged to read age-appropriate books to learn about the art of investing money wisely.
Financial matters including money and credit must be managed responsibly. Young kids who start learning money management skills even before leaving home could be certainly well-equipped to pay for homeownership, higher education, and even more without really overextending themselves. Remember nobody is too young to learn crucial financial skills and lessons. Teaching your kids about personal finance right from budgeting to even investing could go a long way to make them successful and financially savvy individuals.