Parents will always want what’s best for their kids. It’s just that some of them are going about it the wrong way. Some parents think that by “the best for their kids,” it’s all about buying them the best things money can buy, from the gadgets they love so much to the hottest cars when they’re finally old enough to drive.
If there’s one thing that parents must do to make sure their children get the best in life, it would be to teach them about money and finance in general. By teaching financial literacy for kids, you will be, in effect, setting them up for economic success.
So what can you, as a parent, teach your children to help them become financially literate—and eventually successful? Here are some tips.
TALK TO THEM ABOUT MONEY
Kids will be naturally curious about money, so talk to them about it, even when they’re as young as three. In your own way, you should be able to tell them that money doesn’t grow on trees; that they really have to work hard for them. Studies have shown that kids typically learn about finance from their parents, and that discussing money matters with them is one of the most important financial lessons parents can offer.
GET THEM TO DO CHORES
A 20-year study conducted by the University of Minnesota concluded that doing chores from as early as three years of age is one of the best predictors of the success of children when they reach their mid-20s. With the things that they learn from doing chores—including taking responsibility, learning teamwork, and developing a strong work ethic—they stand a better chance of finishing school, choosing a clear career path, and becoming happier people when they transition into adulthood.
GIVE THEM AN ALLOWANCE
If you’re making them do chores around the house, then you have the perfect opportunity to teach them about money by giving them an allowance. As they receive payment for their efforts, teach them about things like saving for a rainy day, how to spend the money they make wisely, and the importance of living within their means.
TEACH THEM HOW CREDIT WORKS
We live in a world where practically everything runs on credit, so it’s a concept that children would do well to learn even at an early age. With your guidance, they would have a clear understanding of what credit is all about and everything that it entails.
They will learn that credit is not bad per se, but that it comes with certain responsibilities and consequences that they have to be prepared for. At a young age, they would be aware of the risks that come with debt, and how they would have to be sure of their ability to pay before getting into it.
INTRODUCE THEM TO INVESTING
The idea of investing seems a little beyond the reach of children, but it’s never too early to tell them they can actually use money to make more money. When you teach children the value of investing, they will also learn how to make smarter financial decisions as you go along.
To get the ball rolling on your children’s investment lessons, go ahead and open a guardian or custodial investment account for them, particularly those who are old enough to take odd jobs here and there and earn an income. With an investment account where they can put in as little as $15 a week, your child will have a great way of getting started in the world of investing. Over time, they will see their account grow, and that will definitely inspire them to do more of the same when they become adults.
These are just some of the things you can do for your kids to have the potential to become financially successful when they grow up. And while results may vary, the fact that you have prepared them for it is something that they will treasure and make good use of for the rest of their lives.