In my recent blog post, I highlighted the importance of teaching students financial literacy. Schools should focus on these goals, but it’s also important for parents to educate their children at home. Maybe you don’t have extensive financial knowledge, but it’s never too late to learn yourself and even teaching children the basics is beneficial. The sooner you start talking to children about financial literacy, the sooner they’ll experience the benefits.
Teach them the basics
For young children, it can be sufficient to cover the basics. Talk to them about saving and the importance of budgeting. Tell them how to look around for the best deal and discuss debt. As they get older, you can address these topics in more detail, but to start out it’s fine to give a general overview. Another great step to take is opening a bank account for them, even if they’re currently too young to use it. They’ll have some money for the future and it will collect a small amount of interest over time.
Involve them in decisions
While you do not need to involve your children in stressful financial decisions, when you’re working on your monthly budget or paying bills it can be helpful to simply have them watch what you’re doing and explain it to them. Tell them how you pay for bills and why, talk about any debt you might be paying and explain credit cards, loans, and interest rates. If you’re planning a budget, talk to them about monthly expenses, savings, etc. They’ll enjoy being treated like an adult and it’ll help them learn valuable skills.
Discuss your mistakes
This subject can be sensitive for some people, but it can be something as small as talking about a time you made a purchase and regretted it. It’s okay to let your children know you haven’t made perfect financial decisions, but it’s also important for them to learn from mistakes you made. Most children do not know much about their parents’ financial situation, so they can’t learn from good or bad decisions. Simply reinforcing the importance of making informed financial decisions is beneficial.
Give them an allowance
You can give them as little or as much as you want, but it’s vital that you teach them how to handle that money. If they spend their money however they want, your children will find it harder to save and budget once they’re on their own. Encourage them to get a job, give them an allowance, and teach them the value of using a savings account or even investing small amounts of money.
Provide other resources
Unless you work in finance, it’s likely you aren’t an expert on most aspects of finance. Provide your children with resources they can use to learn more about managing finances once you’ve exhausted your knowledge. Encourage them to always improve their financial literacy through reading quality books, following blogs, or attending informational lectures. It’s helpful to get various perspectives on financial management and learn as much as possible.