Raising financially literate kids is not easy, especially in a world where so many people have never learned about money. But it’s not impossible either. You just need to be aware of the challenges and work hard to overcome them.
The best way to start? Make sure you are teaching your children basic financial concepts at an early age – even if they don’t fully understand what those concepts mean yet!
There are a number of ways to do this. One way is to make sure that they understand the basics of money and how it works. This can be done by teaching them about creating spending plans, saving, and investing. Additionally, it is important to model good financial habits to your children from an early age. If they see you talking the talk and walking the walk, they will be attracted to that consistency and be more likely to develop their own good financial habits. Finally, parents should provide opportunities for their children to learn about money by letting them handle small amounts of money and making purchases on their own.
With all of this in mind, here are 4 tips for raising financially literate kids:
1. Teach Them About Spending Plans
One of the most important things that parents can do to raise financially literate kids is to teach them about creating a spending plan. This includes explaining how to track expenses, set financial goals, and save for a rainy day. It is important to teach kids the difference between needs and wants. Needs are things that we have to have, like food and water. Wants are things that we would like to have, but we don’t need them, like toys and games. Explaining spending priorities in these basic terms will help them learn how to prioritize spending at an early age.
2. Help Them Develop Good Financial Habits
Another key to raising financially literate kids is helping them develop good financial habits from an early age. This includes things like saving money, investing in their future, and being mindful of their spending. This also means modeling responsible financial behavior. Parents should try to live within their means and save for the future. They should also avoid taking on too much debt. By setting a good example, parents can help their children develop healthy financial habits that will serve them well throughout their lives.
3. Let Them Handle Money on Their Own
Another way for kids to learn about money is by letting them make their own purchases. This can be done with a small allowance or by giving them money to spend on specific items. It’s also important to let kids know when they’re overspending and help them learn how to save up for the things they want.
4. Explain the Value of a Dollar
It’s important for kids to understand the value of a dollar. One way to do this is to explain the difference between needs and wants. Kids need to understand that some things are essential, like food and shelter, while other things are not, like a new video game. It’s important for kids to be mindful of their spending and understand the consequences of overspending.
Want more great tips on raising financially literate kids?
PowHERhouse Money Coaching is excited to offer our next masterclass, specifically for parents! Matt Abatecola of American Century Investments® will be sharing how to help parents teach kids about money.
Personal finance is often not taught in schools, and we want to provide an opportunity for parents to learn positive strategies to educate their children, no matter their age!
Matt is a Regional Wealth Management Consultant for American Century Investments® and works alongside financial advisors across Western PA and Western NY. He holds a bachelor’s degree in business administration, finance and international business from the University of Richmond’s Robins School of Business. He is a CFA charterholder and a member of the CFA Institute.
Join American Century Investments®, PowHERhouse Money Coaching, & other parents on March 30th at 5:30 PM and learn together how you can teach finance in a fun way to your kids!
American Century Investments® and PowHERhouse Money Coaching are not affiliated investment companies.
This information is for educational purposes only. It is not intended to provide, and should not be relied upon, for investment, accounting, legal or tax advice.
Sign up for this free event and make sure your kids are set up for financial success!
And as always, if you’re interested in 1-on-1 help, you can book a discovery call with us.