The importance of teaching kids about money
Finance for children and teenagers is a discussion that often remains silent within households. Yet most societies find it hard to talk money without feeling a sort of discomfort. However, parents should have a conversation on money management with their children sooner rather than late, so they are better prepared to face the future.
So, how parents should approach this topic?
Make sure that they understand that finances are not only a matter for adults and that they should have basic knowledge of what income and spending implies, or how important it is to budget. Adapt the discussion around finance for teens and children, adding key elements that are familiar for them such as the salary they received during their summer job or how much they have earned after babysitting a neighbor’s child.
Prepare them for the future
Even-though finance education is a good start, do not limit yourself to only explain that they should take care of their income and invest smartly. If they are children who only receive money for special occasions such as birthdays, talk to them about making the most of it in the long term. If they are teenagers, you can encourage them to find a summer job not only for the money but also to gain experience that will be helpful for the future.
The cost of higher education
Loans to access higher education are very expensive and they must be aware of this cost. If they have the opportunity to access university or it is something they would like to do, parents should discuss this from the beginning so they know how it works and what alternatives are out there.
The importance of saving
Encouragement around savings must start in the early years since it is one of the keys to personal finance management. It helps explaining the benefits of having saving goals: not only to acquire goods but also to invest and have some security during critical times.
When you decide to have these kinds of conversations with your children, remember that you shouldn’t disguise the truth. Provide them with examples around the management of the family’s economy to make it easier for them to understand that money doesn’t come out of the blue and that they should be careful, especially during a financial crisis or uncertainty periods that put income at risk.