Helping your children with financial literacy

Children are the future, but they also need to be taught the things that matter, so they can care for themselves properly. They learn a lot in school, but one of the things they often miss out on is being financially literate. That is much more than basic math and learning to balance a checkbook or being told that too much debt is bad. Why? And how much is too much? You can help your children become financially literate, and you will be doing them a big favor in helping them understand their own financial management in the future.

Where Do You Start?

There’s no right or wrong answer to where you start when it comes to teaching financial literacy to a child. Some of them will learn better in a particular way, while some of them won’t. Additionally, some children will be more interested in financial matters than others will. By taking your cue from your children at least some of the time, you can make it easier for that child to learn. Nearly anything that involves finances, money or purchasing something can be a lesson for your children, if you frame it correctly and teach them what is important about that particular scenario. Keep that in your mind, and you can use it in all types of situations.

Are You Leading by Example?

If you aren’t leading by example, it’s time you start. Even if you spend money wisely, if it looks like it’s frivolous, or you talk about money like it’s something everyone has an abundance of, your children may develop the mindset that money is basically free. They won’t realize that some people have much more, and others have much less. They will also fail to understand that working for money is important and that money isn’t something to be squandered. Talking to a 5-year-old about why he needs to save for retirement might not be realistic, but there are important lessons about saving the money that doesn’t need to be spent that can be taught at nearly any age.

Children Learn Quickly, but Remember Their Age

Age matters when talking to children. If you talk too far above their level of understanding, you won’t get anywhere. But you also need to remember that children are smarter than many people give them credit for. Treat them like they are smart and capable, and that’s exactly what they’ll likely become. When you talk to your children about financial literacy, work with them on their level and focus on how to help them understand the concepts you’re giving them. Let them ask plenty of questions, too, because that’s often how kids learn. In some cases, though, a child will learn better by doing than by watching or being told.

Showing Them Can Also Make a Difference

For children who may not respond well to just being told something, showing them can help them learn, too. You can generally help them learn by allowing them to do part of the work, such as paying for something in the store or saving their allowance for a toy they want. The more they do the thing you’re teaching them about, the more they’ll understand why it has so much importance in your life and why it should have importance in theirs, too. That can make all the difference for many children, some of whom might not respond well to just being told why they should or shouldn’t do something related to money. The more children know, the better off they’ll be, and that can give you peace of mind about their future, as well.

Disclaimer: The information contained in this article is for general information purpose only and is not intended to be a source of investment advice with respect to the material presented. The ideas contained in this article should never be used without first consulting with your financial/tax/legal advisor.

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