We teach our children multiple things throughout their lives, but one thing we often look over is teaching them the skill of how to manage and save money. According to a 2015 evaluation conducted by the Program for International Student Assessment (PISA), approximately one out of five 15-year-olds in the U.S. doesn’t meet the baseline for financial literacy, meaning they lack a basic understanding of bank accounts, credit and debit cards, and loans. Only 10% understand complex financial issues such as taxes. You may not like to talk about the subject of money to your children, but it is of utmost importance that they engage in money management from a young age so that they are more aware of financial aspects in their future. If there is an opportunity for a lesson to be learned about money management, take it and teach it. It is important to set a directed path for your children, starting as young as pre-k. Finances may not be the most fun to discuss with your children, but you can make it fun! Find games that helps them organize money and coins, or gift them a piggy bank so they are aware that saving is a key component in money management. It can be as simple as playing Hasbro’s The Game of Life with them, which teaches the value of money, creates awareness around taking out loans and saving for the retirement you desire. As they grow, you may increase your vocabulary and start to stress how they may save. It is never too late to set a good example and teach your children how to be financially responsible.
Young children learn from observation, which means that you can teach them the financial skills that they will need in the future at a young age. There are a few strategies that can help you create a financial sound child.
- Opportunities for Lessons
As much as you want to make your child happy, it is important to teach them the value of money. If they run out or want to buy something out of budget, don't just hand over the money. Teach them that money is earned and that if they save then they may acquire what they want. Chores in return for a weekly allowance may be a good way to start showing how money is earned.
- Keep records
Let your children know the importance of saving money and keeping track of their spending and where the money is going. This way they are able to set goals and predict how long it may take to reach them. Re-iterate that saving will greatly benefit their futures.
- Utilize your local bank
Not only is the bank a safe place to keep your money, but it is also a good opportunity to show your children how the system works. Here, you will also have the chance to open a savings account for you children, with the money they accumulated in their savings jars.