Friday, May 6, 2022

Providing your kids with a solid sense of financial literacy can help develop their skills and secure a stable financial future in adulthood. Teaching basic skills around saving, spending and earning can go a long way when it comes to establishing good money habits. There are many different ways to build on your children’s financial knowledge as they grow, and the earlier you start the better.

Here are 5 tips to educate your kids about money:

Talk about money regularly

Normalize talking about money with your children. For many people, money is viewed as a sensitive subject that shouldn’t be discussed in front of children. But instead of allowing your children to draw on their own conclusions surrounding money, why not be open and honest with them about what to expect? By comfortably discussing finances with them, you help them develop a healthy relationship with money.

Set savings goals

Talk to your child about short-term and long-term savings goals. Setting and tracking goals is a great way to develop financial independence and learn the importance of budgeting. For example, when your children ask for a new video game, instead of saying yes right away, encourage them to save for it. This will help them learn the relationship between work and money, and help translate into more long-term goals such as saving for post-secondary.

Discuss needs vs wants

Help children distinguish between wants and needs. This will show them the value of saving and making good financial decisions. Needs might include the basics, such as food, housing, clothing and education; wants include the expenses you can afford with the money left over, such as restaurant meals or movie tickets. Knowing the difference between wants and needs will help your children prioritize their spending and live within their means.

Let them earn their own money

Encourage your children to earn their own money by doing chores, like taking out the trash or cleaning their room. This gives them the opportunity to be responsible while demonstrating the value of hard work and that money is earned. To get your child in the practice of saving the money they earn, try setting them up with a clear piggy bank jar. When you use a clear jar, this allows them to visually see their money grow over time.

Involve your children when discussing your finances

When they are old enough to understand, transparency is important when teaching your children about money. It allows them to see first-hand the process behind planning a budget, shopping smart or paying bills. By including your children in discussions surrounding finances or creating a budget, it helps them become financially literate and prepared for real life money situations when they’re older.

Money is a fundamental part of our society. If you want your children to excel at handling their finances one day, it’s important to teach them healthy money habits now.

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