Those raised without much financial guidance understand how important it is to learn about money early. Especially with saving and investing, applying financial knowledge from childhood is key to compounding financial gains. Thankfully, there are many resources you can use to inform your children about economics, so they are set up for a promising future. Here are five tips you can pass along:
1. You Can’t Always Get What You Want
It makes sense that you would want to give your kids the world, but spoiling them will give them an unrealistic view of what is available to them when they leave the nest. By teaching them the actual value of items they desire, they will better understand the hard work behind every purchase. You don’t want to raise your children with a strong scarcity mindset, but they need to understand the hours of work it takes to pay for necessities and bonuses.
2. Practical Math Is Important
Learning math with real-world applications will help your kids with their number skills while teaching them financial literacy. There are several curriculums explicitly aimed at teaching kids these skills, so seek them out if you need extra help. Books like “Rich Kid, Smart Kid” by Robert Kiyosaki also aim to provide specific knowledge that matches their level of understanding.
3. Home Investment Is Smart
Whether you own a home or not, you can help your kids understand the concept of renting vs. owning. Go through the costs of ownership, and pay attention to extra expenses like yard maintenance, property taxes, and taking care of appliances yourself. Teach how property taxes are determined using this formula: Assessed Value multiplied by Tax Rate equals Property Tax. This will help them set goals for their future home.
4. You Can Be Your Own Boss
Many people focus on the school-to-work pipeline, which is still an excellent decision for some, but it depends on their desired career. However, teaching your kids business skills allows them to envision their own enterprise. This is another opportunity to learn what it takes to fund a business. They can learn about personal savings, obtaining loans from a bank, getting investors, using credit cards, and even crowdfunding.
5. Talking About Money Is Okay
An aversion to talking about money is widespread. You probably have numerous examples of being discouraged from talking about money and told that it’s rude. Without talking about money, however, it’s hard to improve your financial literacy and competency. Make sure that your kids feel open to discussing money with you and understand when and how talking about money is appropriate. You may not want them to boast or pry, but having business conversations with future friends and colleagues can often be hugely beneficial. Make sure your kids don’t see money as a taboo subject, and they have a better chance of handling their money well.
Finance can be challenging to talk about, especially if you weren’t raised in a family open about money. More people are realizing that talking about money is the key to a lot of wealthy people’s success, and there are ways to do it without being arrogant or rude. Teaching your kids about money early gives them the opportunity to be successful and comfortable with their economic situation as soon as possible.
