It’s never too early to start talking to our kids about money. In fact, we all should teach them about financial matters at a young age. After all, your kids won’t learn about finance in general in school, so you’re the best chance that they will have an understanding of how money works as they grow up. We all would want them to be financially successful—among other things—in later life, and giving them financial lessons while they’re still children will play a crucial role in making that a reality.
Here are some tips that will help set up your kids for financial success when they grow up.
Give them the money talk early
Kids as young as three tend to be already curious about money. They will probably see you pay for their ice cream with coins, and wonder why handing over a round piece of metal got them that chocolate sweetness melting on their fingers.
It’s vital that you tell your kids about the importance of money, and how one needs to work hard to earn it to pay for things we want or need. Tell them that money doesn’t just grow on trees or come out of an ATM.
Assign chores and pay them
Some parents may debate the wisdom of making an allowance chart for kids for getting them to help out with household chores, but giving them an allowance for doing chores not only motivates them, but also helps them understand the correlation between work and getting paid. By doing chores, they also get to learn how to take responsibility and work as a team. Most importantly, chores help them develop a strong work ethic, which is absolutely an indispensable component of financial success.
Money management lessons
When they’re earning their keep by doing chores, then your kids will have money to handle, but little to no idea what to do with it other than buy whatever they want impulsively. Since they’re earning money, it would then be a logical next step to teach them how to manage that money. Tell them the importance of saving up, spending money wisely, and living within their means.
Introduce the idea of credit
Credit is an essential part of finance, and educating them on its benefits and risks will help them prepare for a world that practically runs on it. Give them an idea how credit works, and how bad it could get if you dive into it without any ability to pay.
Make them investors
You might think that teaching kids about making investments comes a little too early, but it does not. It’s always better for them to learn that they can use money to make more money while they’re still young.
And if your kids are old enough to take real, paying jobs, open a guardian or custodial investment account for them. Have your kids put in, say, $15 a week into that account, and they will see it grow over time. With investment experience at a young age, your kids will learn to make smart financial decisions as they become older, and that would come in handy when they’re finally playing in the world of stocks, bonds, and other investment instruments as adults.
While early finance lessons do not really guarantee that children will become a financial success, the things they will learn from them will at least make them better-equipped to become one.
words by Samantha Green, BusyKid