With financial literacy for kids often taking a backseat in a child’s curriculum, it’s vital for parents to teach the basics of financial literacy to their kids to help guide their financial decisions. As future generations face more complex financial scenarios, the financial literacy for kids will become an even more important aspect of everyday life.
To help learn the benefits of financial literacy for kids, we’ll discuss the basics of financial literacy and how to prepare kids to make sound financial decisions. The benefits of financial literacy for kids includes having a better understanding of the role of money in everyday life and the how to budget properly and save.
How to Teach Financial Literacy for Kids
There are many ways for parents to enhance the benefits of financial literacy for kids and each method can have various approaches. Our best advice for teaching financial literacy for kids includes:
- Having Conversations: Just having everyday conservations about work ethic and why it’s important to properly manage your money can go a long way in establishing basic economic principles for kids. Explaining to your children that you can’t spend money that you don’t have also helps them understand basic budgeting principles. This can also help them appreciate the things you can buy for them and how toys and trips to Disney need to be earned first. With nearly 50% of parents saying they’ve had to go into debt to pay for something their kids wanted, having a conversation about how debt works can also prevent overspending on purchases.
- Taking Them to the Bank: You’d be surprised at how much information a child is able to soak up in a short time and a bank visit is a great time to teach financial literacy for kids. Teaching kids how a bank account works and how the interest from the bank can work to your advantage also enhances their financial prowess. Even walking them through an online banking transaction can pay dividends for their financial education.
- Reward Them for Chores: While not every family is comfortable paying their children for routine chores, this practice can help establish a way for children to learn about money choices and responsibility. Having their own money allows them to see the importance of working and saving for expensive items they want to purchase.
- Let Them Pay: We’re not suggesting children actually pay for a fancy dinner, but letting children pay (using your money) at the checkout line has many benefits. Children can learn the difference between paying cash and credit card and how each method is used. You can also shop with your child and let them compare price tags of the things they want to help them make financial decisions within their budget.
- Establish a Joint Investment Portfolio: Making small investments in companies you both care about can help educate kids on investing and entrepreneurship opportunities while also merging financial goals. By tracking the progress of the investments, kids can see how their financial decisions have the potential to grow and decline.
With nearly 85% of parents saying that the conversations they have with their kids about finances are effective, it’s vital to start preparing kids for financial decision making as soon as possible.
If you’re unsure on the the process of teaching your children the basics of financial literacy, speaking with a financial advisor can help identify financial areas to target first. A financial advisor can help guide you and your child on a path toward financial literacy.
Matt Logan has vast financial consulting experience to help parents and children learn the benefits of financial literacy. If you or your family needs help achieving financial literacy, Matt Logan has proven financial strategies that are capable of meeting any financial lifestyle. Don’t hesitate to reach out to Matt Logan to see how he can help you and your family. Give a call today: 336-540-9700.