Without financial literacy, your kids may become lost adults. They may make poor money decisions or find it challenging to live a comfortable life. To ensure your kids have a stable future, start teaching them about financial literacy while they are still young.
Start With Practical Knowledge
No matter their age, all kids can start learning the importance of money. As toddlers, introduce them to coins and dollar bills. Play coin identification games or play store to help introduce them to exchanging money for goods.
For older kids, start with an allowance. Allowances are good ways to introduce your kids to saving their own money. Likewise, it helps motivate them to help around the house. Once your kid receives an allowance, talk about where you can put the money. Instead of a piggy bank, consider setting up a savings account for your child. Savings accounts not only give your kid a way to save their money, but it also provides them with a way to learn about interest and money management.
Allow your kids to accompany you while shopping and if you ever have to say no to something your kids want, explain why you have to say no. Involve your kids in financial decisions and talk to them about your finances. Some parents hide their finances for fear that it may stress their kids. If you are in the process of cleaning up your finances, talk to your kids about it. Show your kids how you weigh out your financial decisions and how to limit what you buy to save up for essential purchases.
Explain Homeownership and Its Importance
Homeownership and owning property are crucial to building assets and creating financial security. Explain to your kids how to navigate the market, from house-hunting to obtaining approval for a mortgage. According to the experts, there are various home buying programs available. Teach your kids about the different types of loans and funding available for potential homeowners. The more you talk to your kids about the process, the less stress they may feel as adults entering the housing market.
Explain to your kids how the housing market favors sellers or buyers and that you may have difficulty selling a house if you live in an area with a struggling economy. Likewise, if you have a large inventory of houses on the market that favors buyers, you can have a more challenging time selling the home.
Kids may also benefit from learning the importance of being environmentally friendly. Start eco-friendly habits around your house and explain how being green can not only save money but can save the planet.
Discuss Income and Financial Literacy
Did you know that most kids have money habits by seven? They model their practices after you. Do not be afraid to discuss your income with your kids. If they want a big-ticket item or if you need to shop for a car or something expensive, explain the value of that item and why you cannot afford something like that all of the time.
Teach them how to start their own business to earn an income, even if they do not have capital. There are a variety of loans available for business owners. Talk to them about microloans, crowdfunding, and angel investors.
Financial literacy is vital for all people to understand. The younger you start teaching your kids about money, the more likely they will have financial stability in their future.