Too often, parents neglect to teach their children about money. Your parents might not have done so, and if they didn’t, you might wonder how you can change that for your kids. The fact is that teaching your children how to manage their finances is one of the most valuable things that you can do for them even if you don’t feel particularly well-versed in the topic yourself. The tips below can help you do it.
People often have strong emotions around money and finances for many reasons. It could be because you are struggling with debt yourself. After all, your parents had issues with money or because you and your partner disagree about money. The first step is to make money and finances something you talk freely and openly about. Talking to your partner about how you both feel about spending and saving can be a revealing conversation. You might even want to involve a counselor in these discussions with your partner since money can be such a fraught topic. Once you are more or less on the same page or you at least understand each other better, you are in a better position to teach your child.
Never Too Soon
If you’re wondering whether your child is too young to start learning about money, the answer is that they probably are not. The younger you start, the more natural discussions about finances will seem. You can show very young children coins and bills and talk about money and what things cost. In the grocery store, you can point out prices to them. Of course, as they get older, these conversations will get more sophisticated, like planning key retirement steps and saving for a down payment, but you can start at any age.
Preparing for College
One of the big conversations parents and children need to have at some stage is about paying for college, and this is one reason it’s so important to talk about money. College is expensive, and children usually need to learn how to live on their own and manage a budget. You may also be concerned about how you are going to pay for college. One option is a low-rate Private Parent Loan that you can take out to cover their costs. You might also set up a savings account and help them apply for scholarships and grants.
Goals and Savings
College may be a long way off, and you can start working with your child to set financial goals well before that time. When they are young, they can get an allowance and use it to save up for some toys and other treats they want. You could also work with them to make financially-based decisions about some family activities. For example, within a certain price range, they could decide what to have for dinner on a certain night or could help with a vacation budget. As teenagers, they might have a part-time job, and you could help them open a savings account. You could even get them involved in investing, showing them how a small amount of money invested today can add up over the decades.
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