Financial Education for Kids: More Than Just Dollars and Cents
Introducing your kids to finances, money, and budgets while they are young is the best way to prepare them for a bright financial future as adults. In fact, financial education for kids gives them a strong foundation where they are able to make informed decisions about money to avoid financial mistakes and better achieve their financial goals.
The Well-Rounded Approach to Financial Education
Once kids have been introduced to the financial knowledge needed, they can also learn how a solid financial education is about a lot more than just dollars and cents. A well-rounded approach to financial education is about learning better spending habits and giving them the confidence needed to manage their finances and reach their goals.
Honesty as a Foundation
When it comes to financial education for kids, honesty is an important foundation. Parents should teach them to recognize the value of money and that it does not grow on trees. Kids need to understand the honest truth that parents cannot always afford to buy them everything they want. Knowing that they will need to work hard, establish a career, and earn a paycheck for those things they want in the future empowers them to comfortably discuss financial issues and understand the concept of saving to make a purchase they can then afford later.
Responsibility Beyond Finances
One of the best ways for your child to get a great financial education is to learn responsibility in other areas of their daily lives. Kids who learn to be responsible at a young age carry those traits with them as an adult and that includes being responsible for their finances. Holding them accountable for their grades, household chores, caring for a pet, and saving/managing their own money for things they want are all great ways to teach responsibility that leads to good adult money habits.
Gratitude and Its Connection to Wealth
Studies show that practicing gratitude leads to a variety of benefits including higher self-esteem, better relationships, a more positive outlook on life, and better overall happiness. It also indicates that an attitude of gratitude is linked to financial well-being as well as less materialism. When we are grateful, there is less desire to buy more things. To instill gratitude in your kids, be a role model and express when you are grateful for something, talk about gratitude with them, and ask what they are grateful for.
Encouraging Generosity and Leading by Example
Generosity teaches empathy, sharing, and giving back. Educate your children about the importance of generosity through charitable donations and include them in the giving process as you lead by example and donate. You can encourage them to learn about an organization of their choice where they can volunteer, collect items to donate, or give some of their own money. This is a great lesson that's about more than just dollars and cents; it teaches children to help others in need.
Practical Strategies for Teaching Financial Responsibility
When it comes to a solid financial education for kids, here are some tips and strategies to help build their financial responsibility.
- Saving – This is an important thing to teach your kids who will otherwise spend frivolously. Learning to delay instant gratification and save for a few months instead is an invaluable life lesson. It's never too early to open their first savings account at a credit union.
- Budgeting – Help your kids plan how to spend their allowance or other money. Learning to live within their budget now will set them up for future success.
- Smart Spending – A good financial education includes smart spending. If your kids spend all the allowance as soon as they receive it, deny the request for more money, and explain the spending choices they should have made instead. They will learn better spending habits.
- Earning Power – Give kids a chance to earn money so that you can teach them how to properly manage it. Getting paid for chores will give them control over their spending and saving habits for a smart money lesson.
- Be a Real-Life Example – Talk about finance with your kids. Include them when you donate, talk to them about a purchase you’d like to make but honestly need to save for a few months, tell them that you put money from your paycheck directly into savings on payday, etc. They will mimic these positive money choices.
Consider these strategies when teaching financial education to your kids to lead them to the right path for financial success. Establishing a savings account at a young age and allowing them practical experiences that make them more responsible and teach them life skills is crucial for better decision-making for their financial future as adults.