Oddly there are very few financial classes offered in most high schools. Parents usually are responsible for teaching their children about finances and many parents are unsure of what they should be teaching their kids and how to go about doing so. Financial liability affects us all, and sharing these financial tips with your kids can help breed smart-minded financial accountability. Here are some tips and practices to ensure today’s kids are turning into financially fit individuals. The sooner you start teaching kids financial responsibility, the better!
Tips for Teaching Kids Financial Responsibility:
1) Top five things you can do to increase the odds of raising financially responsible kids: (Based on a study by The Boys and Girls Clubs of America and the Charles Schwab Foundation.)
Help your child Learn to manage a savings & checking account
Teach kids how to track their spending
Teach kids the importance of goal setting
Teach kids how to use technology and online tools to save money
Help your child learn the steps to creating and maintaining a budget
2) Three financial lessons your kids need to learn before they go off to college.
Avoid the credit card trap! (College campuses allow credit card companies to solicit- your child should know not to sign up for every card they see and you should discuss rules if they will be applying for any cards.)
How to save on transportation, groceries, and entertainment while away from home.
Teach your child to develop the habit of paying herself first as a savings technique.
3) Young kids can learn about finances too. There are things parents can do starting as young as 3 to help their children learn the value of money. What do you start teaching your kids and at what age? You may want to think about letting your kids earn a small allowance and then teaching them how to save a percentage and treat themselves with a percentage of that. Certain chores should be part of the child’s responsibility to the household. Other chores can be done with an allowance as part of the structure.
4) Get kids involved with the household budget. Think about where you can work the kids into the planning and the executing of the monthly budget. Letting them in on the process of a small part helps involve them and prepare them for financial responsibility.
5) Prepping your kids for the world of investing! Set up a “pretend 401K” and match it as the kids save. Have your kids take a percentage of what you save through couponing and invest in stocks of companies they believe in.
6) Set up a “pay yourself first” system. Have your kids put money into a savings account before they spend a dime of the money they have earned.
Capital One reports that 69% of parents feel less prepared to talk to their children about investing, financial guidance and advice than they do the “birds and the bees.” I hope these simple strategies help parents begin financial discussions with their children more easily. Please share any tips you have on what works for your family for teaching kids financial responsibility!