One of the most essential life skills is knowing the ins and outs of money. As a parent, it’s critical that you teach your children the fundamentals of financial literacy.
Money is an incredibly valuable resource that no one can live without. But there’s a right and wrong way when it comes to handling it.
Teaching your children everything they need to know about money while they’re still young can help instill some good habits.
In this article, we’ll be assisting parents with how they can teach their children financial literacy.
Get Them Started on Chores and Earn Allowance
At a young age, children need to learn that if they want something, they must work for it, and there’s no better way to ease them into it than by giving them a few chores to do.
Completing chores and earning their dues is a fantastic way to give them structure and help your children be more responsible.
You can have them help with unpacking groceries, doing the laundry, taking out the trash, walking the family pet, and wash the dishes.
Not to mention, having your child take care of these tasks gives you more time to yourself and focus on your own responsibilities.
Have Them Pay a Portion
When it inevitably comes time for your child to finally get that toy, game, or action figure they’ve wanted, having them pitch in on the purchase can help them understand that money isn’t an unlimited resource.
Furthermore, letting them experience what it’s like to buy their own things can encourage them to earn more allowance, which helps them build a solid work ethic from a young age.
Talk to Them About Loans and Credit Cards
Most will likely face financial hardship at some point in their life. Whether it’s not having enough in reserve or struggling with debt payments, we all need a little help with money.
Your child will inevitably be face to face with these types of scenarios and it can happen as early as their teen years.
This is why it’s important for you to talk about credit cards and loans. These are two ways people can get their hands on some fast cash. But they’re also big financial responsibilities that can cause massive issues if not handled properly.
Explain to your child that they cannot go overboard when it comes to applying for credit cards.
Tackling more debt than you can handle can break your budget and you’ll be left with next to nothing in terms of savings.
The same applies to loans, especially personal loans.
However, these require a bit more forethought and are not easily obtained as credit cards.
This is where you need to explain to your child that they need to assess the situation their need and have them ponder the question should I get a personal loan?
You can even review a guide that goes over when it’s a good idea to take out a personal loan with them.
Open Their First Bank Account
Nothing can make children feel like they’re stepping up in the world than opening their very first bank account.
This account is where your child can store their hard-earned funds from chores or their part-time job.
If your child is under 18, you can open a kid’s bank account.
This is a type of joint account where you can manage how much your child deposits and withdraws from the bank.
This is one of the absolute best ways to get your child introduced to managing their finances at an early age.
Once they’re older, you can go with them and have them open their own account without any supervision.