It’s important for parents to make sure they speak with their kids about the fundamentals of finances. While many traditional schools tend to focus on core subjects such as math, science, English, social studies, and foreign languages, they may not be teaching the concepts of financial literacy. Therefore, this is something that parents may need to address with kids on their own. Unfortunately, a lot of parents are not comfortable discussing money with their kids, often viewing it as a “taboo” topic. However, it’s important for kids to learn about money at a young age so they can be prepared to manage their own finances as they face the future. When it comes to financial literacy for kids, there are a few key points to keep in mind.
Discuss how people earn money
The first step when it comes to talking to kids about finances is to teach them that money comes from hard work. Too often, many kids think that money simply comes from a piece of plastic with their parent’s name on it that they swipe at the store. By teaching kids that money can only be earned through hard work, parents can eliminate any sense of entitlement that their kids might have.
Parents should talk to their kids about their own careers, what made them choose that career path, and what kinds of tasks they perform at their jobs. It’s also helpful for parents to encourage their kids to think about what they might want to do when they get older. Furthermore, it’s wise to give kids an allowance for doing household chores as a means of teaching them the value of hard work and earning money.
Teach kids about budgeting
Oftentimes when kids receive money, the first thing they think about is what they can buy with it. Before kids jump into spending that money, it’s important for parents to talk to their kids about budgeting. While spending some money is okay, it’s vital that children learn the concept of budgeting. Otherwise, kids may grow up thinking that all of their money is meant to be spent immediately.
When kids start earning an allowance, it’s a good time to talk with them about deciding how much money they should spend and how much they should save. That way, kids can learn how to budget appropriately both for the present and in the future.
Talk to kids about giving back
It’s also important for parents to encourage their kids to donate money to charity, if possible. Giving back is important when it comes to raising well-rounded children. However, it might take younger kids some time to understand the importance of donating to charitable organizations. You can start by volunteering with kids at places like Goodwill or local food banks. This is a good way for children to see that these types of organizations can’t operate without charitable donations.
Teach kids learn about credit cards, checking accounts, and savings accounts
Financial literacy means understanding the different types of financial tools at our disposal, in addition to cash. Therefore, it’s important to talk with kids about opening a bank account and why this is important. Older kids might be able to understand the concept of interest as well. As kids grow up, parents also need to talk to kids about how credit cards work. While credit cards may seem great on the surface because of the convenience and rewards they provide, they also make it possible for people to spend more money than they should. Parents need to make sure they review these financial tools with their kids to make sure they manage their money well in the future.
Review investments and taxes with children
Finally, parents also need to talk to their children about taxes and investments. Investing is a great way for kids to use their money to save for retirement, college, or a home. On the other hand, parents also need to talk to their kids about taxes, where they come from, and why they exist. Parents can also talk with older kids about how they can use investments to shield their assets from being taxed. Some parents might even teach their older kids how to do their own taxes. These topics are critical when it comes to financial literacy.
Trust the team from young scholars academy in Colorado!
These are some of the most important tips a parent can follow as we aim to teach our kids about financial literacy. Make sure that you provide your children with the strong foundation they need to set themselves up for success, both in and out of the classroom. At the Young Scholars Academy in Colorado, we focus on childhood education, providing your kids with the practical skills they need to succeed. Contact us today to learn more about how we can set your kids up for success!