How can you best educate your children about money? If you’re like many parents out there, it’s one of the more difficult topics to teach your children. Basic money education is one of the many subjects that even schools do not address properly, yet it’s a subject that we will all face each and everyday of our lives. In fact, there are few other subjects that will have the level of impact that a basic financial education will on our lives as adults.
4 Ways To Educate Your Children About Money
If this is you, then it’s ok, you’re not alone, millions of parents across the world don’t know where to begin to delve into the murky depths of the topics of finance and money (many parents, in fact, don’t have these skills.. so how do you think the kids are going to learn??). If you’re planning to talk about money to your kids, then the first step (aside from educating yourself), is being sincere and straight to the point and teach them the basics.
A case study by Pew Research Center shows that 32% young people aged between 18 and 34 still receive financial aid from their parents, a 10% increase from stats taken in 1960. These findings show that quite a number of the young people above the age of 18 don’t yet know how to manage and budget their money – a problem that can be traced right back to their parents.
Here, we are going to answer a few tough questions about educating your children about money.
Educating Your Children About Money Tip 1: Break the Ice Early
Perhaps, the reason why most of us as parents find ourselves in difficult situations whenever we want to educate our kids about money is that we are beginning too late. Most psychologists and money experts recommend it’s good to start teaching your child on how to use money very early (we’re talking long before they’re old enough to have a job) by giving him or her an allowance and teaching them the benefits and rituals around saving. If they want something that’s more than the cost of their allowance, they have to save for it.
Start educating them about all aspects of money, saving and budgeting as early as when they are three or fewer years of age. The simple idea that you can’t spend everything now and you need to put some aside is a concept that has the power to literally change their lives in the future.
Educating Your Children About Money Tip 2: Educate Your Kids How & When To Save
Leading on from the first point. Cicero said, “frugality includes all the other virtues,” therefore, as a parent, you need to educate your children about the understanding that thriftiness starts with savings.
Children need to be educated that spending everything that have is not sustainable. When they want something big like a bike, car or even a holiday or to travel the world long-term, they must save for it. As a kid this can seem like the longest hardest (and meanest) thing ever, but end of the day the skills you will teach them will stay with them for life.
Let your kids also know that you’re saving for their future education or for a new car etc... in short, lead by example. Like anything, educating your children about money starts with you setting a good example.
The other thing you can do is reward their saving abilities by supporting their efforts. For example, if they want to buy a new bike, offer to double their money if they can save the whole price so they can get an even better bike.
Educating Your Children About Money Tip 3: Introduce Loans and Debt
Understanding debt is a very important part of educating your children about money. Over their lives, your kids will need an education that extends to at the very least, a basic understanding about loans and debt.
Many adults today, don’t even have a good understanding of debt and how interest works. This is a powerful failing of the education system and has led to the issue of Australia being in far too much debt.
Explain to your children the concept of a loan and bank interest. Then impart an understanding of why it is so important to pay off debt quickly and on time. You can start by asking your kids to lend you some cash from his/her savings for a week; then you’ll refund them with interest and visa-versa with them being in debt. That way, you will have taught them to understand how a loan works from both sides of the equation and what it feels like to be in debt. – An important lesson.
Educating Your Children About Money Tip 4: Leverage Monetary Themed Gaming Apps
Today, there is a whole raft of gaming applications which can help you teach your kids about money with ease. Phone apps like Star Banks Adventure can help your kid learn about money in a fun way. Unlike the traditional games of yore, the modern tech platforms provide you with an easier, quicker and ironically less expensive way of educating your kids about money and their finances.
I think we can all agree that the future well-being of your children is well worth every effort you can dedicate to educating them about money. So get started early, never make conversations about money taboo and lead by example.