Growing up, our family didn’t often discuss finances unless it was in the context of lack or limitation. Such early experiences can often shape our understanding of personal finance into adulthood. This is why we’ve curated a guide on raising children who are financially astute.
Like many others, I committed numerous financial errors as I transitioned into adulthood. This included mismanagement of my initial earnings, lack of adequate banking know-how, and imprudent accumulation of debts.
As my understanding of finances evolved, I felt the need to help my child build a solid financial base. More crucially, I wanted him to adopt a bountiful currency mentality and grow into a financially secure adult. If you also aspire to raise financially smart children, here are various strategies you could implement.
1. EMBRACE FINANCIAL DISCUSSIONS:
Children will typically indicate their readiness to talk about money matters. My son did so by inquiring about the prices of toys or my monetary wealth. Rather than divert the discussion, I answered his queries to the best of my ability, reassuring him that it was perfectly alright to discuss finances. During our grocery trips, I used instances of budget allocation and purchase choices as instructive examples on priority setting.
2. ESTABLISH A CHILD’S SAVING ACCOUNT:
My initial banking experience at age 17 resulted in a tarnished credit score. Eager to prevent a similar fate for my son, I helped him open a Junior Savings Account when he was just 6 or 7 years old. The kid-friendly account granted him rewards for deposits and provided opportunities to understand how to save money.
3. ENABLE YOUR CHILDREN TO EARN MONEY:
I believe in extending monetary allowances as this provides children the first taste of earning and managing money. My son is given a small allowance for fulfilling assigned chores. I also guide him to distribute his allowance into saving, spending, and gifting categories, fostering prudent financial habits.
4. ALLOW CHILDREN TO MAKE SPENDING CHOICES:
By participating in some spending decisions, children can learn from their fiscal errors and enhance their money handling skills gradually. For instance, my son is allowed to spend his report card reward as he pleases, and over time this helps him realize the implications of impulsive purchasing.
5. MAKE FINANCIAL EDUCATION FUN:
Instill a positive perspective towards saving, budgeting, and money management in children by incorporating fun elements. Reading children-centric personal finance books and playing related games might be good starters.
Remember, in the end, most parents wish to raise children who are financially aware to improve their future prospects. Consider employing these tips as a foundation to formulate your unique approach to instilling financial wisdom in your children.
