The following is a guest post…
Now more than ever, it’s so important that children become financially aware from a young age. The changing times mean finances come up more and more. Fortunately, they also mean that there are countless ways for you to help your kids become financially literate long before they leave the nest.
Sure, it may seem unnecessary to teach your kids financial awareness before packing them up for college. But that’s simply not the case. Young adults today know considerably less about finances than earlier generations. And experience using financial products gives them a solid foundation for when they’re on their own. Understanding the benefits that looking through Fisher Investments NASDAQ profile can have on your finances. Talking to kids about money from a young age, using everyday moments like shopping for food or going to the ATM as teachable moments, goes a long way.
Not Your Mother’s Piggy Bank
Piggy banks are a great way to teach even the youngest of children the value of saving. They’re no longer the simple piggy banks of old. Today, there are piggy banks out there that really teach kids the value of budgeting and choosing what to do with their own money. You’ll find piggy banks that come with compartments like save, spend, and give to kick this lesson to a higher level.
Simple Savings With Allowances
One tested method of teaching kids about money is an allowance. Try giving an allowance but requiring your child to use some of it to pay for monthly expenses. Then increase the allowance over time, requiring that your child pay for more of his or her own things. Over time, he or she will become less and less dependent and learn about saving.
Next Step: Prepaid Cards
Once your kids have a handle on the allowance system, graduate to prepaid cards. This will give a sense of independence while practicing real-word tools in a low risk environment. You’ll have the option of loading the allowance at a given interval—say, the 15th of every month—and then make kids pay for certain leisure activities with the card. Make it clear that they won’t get any more until the next time that date rolls around to teach budgeting.
Savings and Checking Accounts
By opening an account with your kid, you’ll have an easy way to teach about important issues like account maintenance, fees, and interest. If you want, give an incentive for kids to save like offering a match for putting money into a savings account, like 25 cents for each dollar put in. This will prepare kids for going out in the world where they need these accounts.
Finally: The Credit Card
When you think your kids have learned enough, it’s time to teach them about credit cards. Learning young will help them stay out of trouble later when they’re really on their own. Either make your child an authorized user on your account or help to open a student card under their name. They’ll stand more ready for college’s independence.
Teaching children about finances prepares them for a life without your lifeline. This way, they’ll know how to navigate the world of finances and stay out of trouble when they’re on their own.