According to a famous saying, "every crisis has its silver lining." For many, today's harsh economy gives a rare chance to be creative in how we educate the next generation about money and how to handle it.
As your children’s financial future grows more uncertain, you want to ensure that they are equipped to handle their money wisely. They will likely look to you for advice and guidance on managing their finances, so do your part and teach them how to prepare for their future.
Recognize the Fundamentals
As your children grow up, do you think they’ll be able to handle their finances on their own when they're older? If you’ve seen how children dependent on their parents for an extended period leads to strife among their families and a negative influence on the family’s legacy and retirement planning, have you thought about what you can do differently?
Most parents want the best for their children and don't want to hurt their chances of long-term success. It’s essential to understand the connection between what you do now and your future. This connection isn’t always evident.
To successfully provide for your future, regardless of your age or financial situation, it’s essential to focus on the future. Preparation also includes having difficult conversations with loved ones about money, but you may be reluctant to start those conversations.
Here are five ways to start a conversation about money with people who matter to you:
1. Set a Good Example
Parents often tell their kids, "do as I say, not as I do." But it's essential to walk the talk with kids so that they learn about responsibility. Kids are watching you for cues about how to act, whether you realize it or not. If you have kids, make sure you understand that they're watching your every move.
2. Discuss the Importance of Financial Independence
During your finances talk, it's important to discuss how being financially independent is a good idea for your children.
It's essential to help your children realize that independence is vital for their lives and allows them to retire. This is especially true for today's generation because nobody wants their children to pay for their retirement.
When you open up this discussion, you also give yourself the chance to portray a positive lifestyle for your children. By setting this example, you significantly increase the chances of following in your footsteps and securing their future.
3. Don't Give Them an Allowance
Giving children an allowance is that kids are given a certain amount of money to spend as they see fit. This might seem like an excellent way to teach kids about money, but it's a terrible idea.
A better way to teach your kids about money is by taking them to an ATM and helping them withdraw some cash. Then, practice depositing the money into a bank account while explaining different banking terms and how checking accounts work. By taking them to a bank, you can help them understand how credit works.
4. Buy Your Child a Piggy Bank
Many kids' first experience with money may be saving their allowance in a piggy bank. First, you can help them learn how to start saving by going to the bank and teaching them how to put money in a piggy bank. As your children grow older, you can teach them about investing in stocks and bonds.
5. Help Them Develop a Savings Plan
Once your children have saved up a reasonable amount of money, you can help them develop a sound plan for using that money to save for something big. They need to understand that a big purchase requires a big sacrifice.
When your children are old enough, you can help them develop a savings plan that helps them save money for a larger goal. Tell them they'll need to work hard saving their money to save for something more significant in the future, like a car or a home.
There are many ways to help your children reach their full potential, but the most important thing to remember is that you need to do your part in helping your children reach their full potential. It all comes down to developing a strategy to help your children secure their financial future.
Kiddie Kredit can assist you if you want to teach money management for kids. Kiddie Kredit is a smartphone app that teaches children about the credit system by having them do activities. Encourage your children to take responsibility while also learning the value of money. Download the app right now!