Teaching Your Children About Financial Security
Financial security is a critical part of modern life. The digitised nature of money has made financial literacy more important and increasingly difficult to master.
If you have younger children, it’s worth taking the time to start teaching them about basic financial security as soon as possible. Even at a young age, you can begin to lay a foundation to help them live in a safe, responsible manner when they become adults.
While you can’t necessarily dive into things like side income and housing costs with a four-year-old, there are many ways that you can quietly prepare them to learn these lessons properly in the future. Here are a few tips to help you begin the lifelong process of teaching your children about financial security.
Start with the Basics
There isn’t a set age to begin teaching your children about money. However, many people wait far too long to start the process. The truth is, you can begin your child’s financial education at a fairly young age, even before they’re in school — as long as you don’t get overly ambitious about it.
If you dive right into things like budgets and accruing interest, you’re going to lose your child’s interest in a matter of seconds. Complexities aside, a young child can only focus on a task for a matter of minutes at a time. Instead, look for other ways to begin the learning process, such as:
- Analyzing their learning style to help you teach them in the future.
- Using educational videos, books, and games, to begin to expose them to basic concepts, like coins, dollars, saving, and spending.
- Talk with them about things like digital currency and working for a paycheck and then encourage questions as they begin to grapple with the concept of how money works in the modern world.
It’s tempting to wait until you can dive into bigger subjects with older kids. However, complex financial security questions will be much easier to teach if the basic building blocks are in place first.
Get Hands-On Experience
Once your child begins to enter grade school, you can start to up the ante a bit. As they begin to grasp basic mathematical concepts like addition and subtraction, you can start to teach them through things like:
Using real-life examples
Have your child help you make purchases online, take them shopping with you, and show them how you pay the bills.
Beginning an allowance
Allowances are often given too late in the learning process — give your child an allowance as early as five years old to help them begin to understand the process of handling their own money.
Building a budget
Their earliest years should be spent teaching your child about terms and ideas. As they begin to grow, though, it’s important to help them gain experience actually handling money.
Once again, this may feel basic, but it can be a huge help in smoothing the path as they attempt to maintain healthy financial habits and protect their finances in adulthood.
Prepare for the Future
Once you’ve started to lay a solid fiscal foundation for your children, you want to continue to foster healthy financial habits throughout the time they’re living with you.
Eventually, you’ll get to big-ticket items like getting a car loan, applying for their first credit card, guarding against financial fraud, and finding investment opportunities. Remember, these may be too big to tackle today, but it requires many baby steps to build-up to the point of teaching these lessons.
Along with actually helping your children learn to be financially literate, it’s also important that you take the time to prepare for the future. Consider each major financial event in your child’s life. Then map out how you want to handle each one so that it doesn’t surprise you.
This isn’t just a convenience. It’s your responsibility as a parent. It’s up to you to ensure that your child is ready to handle their own finances once they’re on their own. As such, you must develop a game plan for broaching each financial subject, topic, and lesson with them on time as they grow.
Helping Your Children Become Financially Secure
It’s easy to kick the can of financial literacy down the road. However, there is no better time to teach money matters to your kids than when they’re safe in the womb of your nuclear family unit. Don’t be afraid to start the process at a young age.
As you take small-yet-significant steps, you’ll begin to benefit from a snowball effect of financial knowledge. Your children will steadily learn to grasp concepts, build habits, and learn to protect themselves financially for the rest of their lives.