One way parents can prepare their children to do well and make good decisions as adults is to educate them on financial literacy and responsibility. This can be an ongoing process, however. So, start teaching your kids how to be smart about money at an early age, and build on this as they grow and mature. Here are some pointers for parents who want to be sure their kids are well equipped to manage money wisely in the years to come.
Set a good example.
Probably the most important thing you can do to prepare your children to be responsible with money is to model good financial behavior. This means avoiding big unnecessary purchases and researching carefully before making big necessary ones. It means resisting the temptation to make impulse buys. Saving strategically when there is something expensive you want – such as a fancy vacation or a new car – can help them to see that frugality and financial mindfulness pay off.
Help your kids get comfortable working with numbers.
Some kids will be automatically intrigued by financial learning if they’re already into math. Others, however, may worry if math isn’t their strongest suit. Math doesn’t have to be confusing or intimidating, however. You can help your kids get comfortable working with math if you approach it as a series of games or puzzles or introduce them to basic math concepts using topics they’re already interested in, such as sports or nature. Also, let them take their time and figure things out, so they aren’t stressed about getting the wrong answer or forgetting details.
Begin with the basics.
Make sure your kids have a good groundwork in financial literacy from the very start, so they know things like how much different coins are worth, how to estimate the cost of things, and what is entailed in making a simple purchase at a store. As time goes by you can teach them more. When they are older, help them open a bank account and show them how to balance a checkbook. Teach them about credit versus debit cards, and the meaning of interest. Later you can teach them about even more complicated ideas, such as how the federal reserve works, and what is involved in the world of investing. Building step by step is the best way to teach your kids how to understand and manage finances.
Encourage your kids to save instead of splurging.
When kids first have their own money, they may find it burning holes in their pockets if they aren’t encouraged to save rather than spending unnecessarily. Help your kids understand that it’s worthwhile to pass on purchasing something they don’t really need or greatly want, in order to save for bigger or more important things. Talk to them about the importance of keeping some savings on hand, too.
Create opportunities for your kids to earn money.
Helping your kids find ways to earn their own money is important not only because it is part of financial literacy, but because it helps them develop a sense of responsibility and a work ethic. Even working small jobs like doing yard work for neighbors, or dog-walking, can help young people get a sense of the kind of work they might enjoy, also.
Prepare them to be knowledgeable about big financial decisions.
A lot of the money-related decisions your child will have to make when they are on their own may be confusing for them if they aren’t educated in advance. For instance, when your child decides to purchase their first home, they will need to understand not just the importance of budgeting for it, but also the whole purchasing process, including applying for a mortgage and paying the many additional costs associated with real estate buying. They will need to know about how to plan for a down payment, and that the amount paid down will be contingent on the type of loan they take out.
Teaching your kids financial responsibility is important whatever your family’s situation may be. Their financial choices will have an impact on all aspects of their life, and often may be key to whether they thrive or struggle in the future.
Parents seeking further educational opportunities for their children should check out the resources at State Symbols USA and Kids' Money.
Article provided by Laura Pearson at Edutude.net
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