Financial skills are so essential in terms of navigating adult life, yet there is little to no scholastic program in place to educate kids in a classroom environment, which means this responsibility lies almost entirely with the parents. Introducing money to your kids starting at a young age lends itself to also teaching them that this conversation is never out of bounds, and creates a commonplace vibe surrounding financial discussions. Giving them this perspective is almost as important as actually providing them with the skills and knowledge they will need. There is no blueprint for these lessons which gives you creative license to teach your child in the way they best learn. Teaching children financial literacy in a fun way makes it relatable across age ranges and prevents them from feeling like they are being dictated to which can lead to lower retention levels or even worse, deliberate disregard for the information you are arming them with.
Once your child has started to round out the latter end of their teenage years, they will need direction in terms of the next stage of life, which will likely be their first experience into adulthood. However, waiting until that juncture to start the conversation would be doing them a disservice. You hear it all the time how early education is the best way is to ensure that your child has a smooth transition from a life under your wing to the independence that can come with college, for example.
If your child is going to be expected to fund their education through their own means then in terms of alerting them to this fact, the earlier the better. Have open and frank conversations about the fact that they will be responsible for this large financial responsibility as well and what that means in terms of how to acquire the funds, as well as how to ultimately repay them. Student loans are going to be an obvious addition to this conversation.
To make the lesson fun, and not daunting, use tangible tools to show them how their loans will break down. You can use a student loan repayment calculator to estimate what your monthly payments may be taking out a student loan with a private lender. Expectation management is a huge component of teaching your children how to plan for their financial future. Especially once your kids reach the age of eighteen and they can make their own financial decisions, having taught them to understand that even quick decisions have long-term consequences will serve them well.
From an infantile age you are teaching your kids that they sometimes must wait for things that they want, whether you realize it or not, you are instilling this lesson in them. So, once they reach an age where they will be able to conceptualize this fact, incorporate some fun into the more intentional learning sessions. Regarding money specifically, using things like money jars, allowance, and goal charts are creative ways to make this lesson interactive and enjoyable, not to mention age appropriate for the little ones.
The only way a child is going to learn that they are not going to capitalize on their every desire is to show them by example, and there is no such thing as starting too young with a lesson like this. Even simple day-to-day examples like letting your kids know that if you are in the middle of a task you will not drop it to satisfy their request if it is not urgent or emergent teaches them delayed gratification. In terms of money lessons, have your child set a goal for themselves based off a want of theirs, maybe it is a new toy, or art supplies, or even something as small as a paid app on their tablet and then discuss with them ways to earn it with intention, over time. The more as a parent that you practice delayed gratification with your kids the better chance they have at being able to put that skill into practice without friction or conflict once they become adults.
Loosely related to the lesson on delayed gratification is a lesson on being an intentional consumer. This means teaching your children the importance of a budget, comparing products before purchase, and not getting locked into contracts that subtly drain their finances. Credit card management should also be included in this conversation. Kids tend to base their wants on what they see in their peer groups, social media, or celebrity culture. Letting them know that they have a financial obligation to respect their own budgets will help lower these tendencies. Even lessons in couponing and purchasing generic brands over well-known brands will be of great assistance once they are out from under your wing, and your wallet.
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