photo by Annie Spratt via Unsplash
3 Opportunities to Teach Your Kids About Finances
September 8, 2021
by mikkie mills, guest contributor
Finances are one of the most important parts of modern life, and far too many manage to skate by in life without really understanding financial responsibility and management. It’s not commonly featured in the curriculum for younger students, and that can leave a lot of fresh-faced college freshmen being tested on knowledge they may never have experienced. To avoid this fate for your children, you can take matters into your own hands by teaching your kids about personal finances.
While it helps to teach your children about finances even earlier, it’s never too late to start, and college presents perfect object lessons regarding the importance of managing finances. When your child is preparing for college, they’ll need to make a number of important decisions, potentially without fully understanding the consequences. Taking the time to guide them through the planning stages is a great way to introduce some financial concepts. For example, when applying for student loans, your child will need to decide how much money they’ll accept from those loans, and this would be a good time to really emphasize the long term logistical problem of debt. Likewise, shopping for supplies and groceries before they first move into their dorm room, you can casually explain how to shop on a budget and, more importantly, how to make a budget to begin with. Another good tip is that working through college is a good way to take on less debt, but it also makes time management more important and difficult.
If your teen is eager to join the workforce, that represents one of your best, earliest, and most organic introductions to financial management concepts. Naturally, as your child starts to put their blood, sweat, and tears into a paycheck only to have it vanish, you can step in to turn their discouragement into an important and long-lasting lesson. Figure out what your child wants the most, and go over the logistics of buying that item with them. Convincing them to save up for something special is a great way to get them to realize that money is not a thing to spend so much as it is a thing to have. You can then tell them that being a little bit less frivolous with their money will make it easier and faster for them to get what they want. This can even carry over to their approach to work, as well. If you can convince your teenager that working overtime to make more money is a good thing, you’ve won one of the most important battles already.
With an allowance, you can begin to introduce financial concepts to your child as early on in their upbringing as you want. Simply put, giving your child an allowance and having them do chores is an important form of training a child for life in the modern world. By offering them payment for work, you have given them a job, and much of the above can apply here. However, there are a few key differences. For example, while you may offer some allowance to your child for their chores, you can offer them more money if they do more work around the house. Again, this can help to build a work ethic as well as a considered approach to money. Another way to improve their understanding of finances is to act toward your children as a banker, offering them more money if they don’t claim it immediately. This introduces the concepts of earning interest for saving money and the desire to amass wealth instead of spending money frivolously.
Financial skills will be important for as long as money is important, and money has been important for millennia. Too many kids don’t learn about finances at all until it’s time to put those non-existent skills to the test. However, these tips can make it easy for you to give your kids an edge when it comes to finances.
Raising financially savvy kids
Today’s kids are growing up in a consumer-driven world, with technology at their fingertips, and the latest and greatest products on display for all to see. This can quickly escalate to children consistently wanting more. Without modeling appropriate spending to a child, kids can grow up with a skewed impression of money.