Select Page

The responsibilities of life can at times seem overwhelming. Suddenly you have to start thinking about taxes, retirement planning, and saving for your children’s college education. Teaching kids how to budget their money effectively from an early age can help them navigate these waters more easily in the future. Here are a few keys to the importance of teaching children financial literacy and the steps that you can take to do it right!

Instill a habit of saving

Starting to save early on in life ensures that children will be able to set aside money for important future goals like college, retirement, and even buying their first home. It can also teach them valuable money management skills such as delayed gratification (receiving the reward after saving) or spending responsibly (not spending all of their savings at once). Older children might also be able to take more control of their savings by making specific saving goals. For instance, if they want a car when they graduate, how much will they have to save for them to buy a reliable vehicle in that time period?

 

Create opportunities to earn money

Another key factor of teaching children financial literacy is that if children are expected to work for their own spending money, they’ll be more likely to value it and spend it wisely. This might be as simple as mowing the lawn or babysitting younger siblings. Alternately, parents can give their kids tasks that generate a few dollars a week with a little creativity.

 

Assist children to learn to make wise spending decisions

Kids are going to make mistakes. That is inevitable. By teaching children how to budget their money from an early age, parents can ensure that they learn from those mistakes and don’t make them again in the future. For example, if a child wants a new stereo system, parents may want to guide them in making the decision based on researching and finding the best product at the best price.

 

Show children the importance of giving

Teaching children to give back is another important aspect of teaching them financial literacy. Money can be a powerful thing, and if your child learns not only how to save it but also the importance of sharing with others, they’ll have plenty of opportunities to learn valuable lessons about life. A child is never too young to learn about the importance of philanthropy.

 

Model a proper financial behavior

Parents must lead by example as well, which is why they must set a good financial example. Not only will this help children adopt those same values later on in life, but they’ll also be more likely to emulate their parent’s behaviors and habits.