Starting Early: How Parents Can Teach Kids Financial Responsibility
If you’re like most parents, you want your children to grow up financially secure and develop a strong sense of financial responsibility. However, starting conversations about money can be tough.
A 2020 T. Rowe Price survey found that 41 percent of American parents feel anxious when discussing financial matters with their kids. While talking about money can feel daunting, teaching children about finances early on sets them up for future success.
Financial Literacy Isn’t Typically Taught in Schools
Only 26 states in the U.S. have established formal requirements for teaching financial literacy to high school students.
In addition, many of these programs don’t extensively cover all the financial topics kids will encounter as adults.
This is why parents must take the lead. The earlier parents start discussing money matters, the more financially responsible their children will grow to be.
Parents Should Discuss Finances Before Having Kids
Parents must get on the same page about finances before their children arrive.
By aligning financial goals, budgeting practices, and saving strategies, they create a unified approach to money management. This harmony sets a solid example for their kids, showing them the importance of collaboration and communication in financial decisions.
Discussing money matters early also helps parents anticipate future expenses related to raising a family.
Using Everyday Situations as Teaching Moments
“Children absorb information about money from various sources, including TV ads, online content, and conversations with peers. These early influences shape their attitudes and expectations toward money as they grow. It’s essential for responsible adults to help children navigate these influences and develop realistic perspectives on money,” advises Martin Walcoe, President & CEO, David Lerner Associates, Inc. at David Lerner Associates, Inc.
Opportunities to teach kids about money are everywhere in daily life.
For instance, grocery shopping can become a lesson in budgeting, comparing prices, and making smart choices. Allowing children to help with simple tasks, like paying at the checkout or counting change, makes them more comfortable handling money.
These real-life scenarios are practical ways to demonstrate financial principles in action.
Setting Up an Allowance System
An allowance can be an effective tool to teach children about earning, saving, and spending.
Parents can introduce concepts such as budgeting and saving for desired items by giving kids a small, regular sum of money.
Encourage children to divide their allowance into categories like savings, spending, and charity, teaching them to manage their money wisely from a young age.
Incorporating Technology in Financial Education
In today’s digital age, numerous apps and online tools are designed to help kids learn about money.
Interactive games and budgeting apps can make financial education fun and engaging. These tools often provide practical lessons on saving, investing, and understanding interest rates.
Leveraging technology can enhance traditional teaching methods and keep kids interested in finances.
Getting Advice from Financial Professionals
Sometimes, parents might feel out of their depth when discussing certain financial topics.
Seeking advice from financial professionals can be invaluable. Financial advisors can offer insights into complex subjects like investing, retirement planning, and tax strategies.
Bringing in an expert ensures parents provide their children with accurate and comprehensive financial education.
Conclusion
Starting financial discussions early and making them a regular part of family life equips children with essential money management skills. Parents can make financial education engaging and practical by using everyday situations, setting up an allowance system, and incorporating technology. Professional advice further enriches this learning journey, preparing children for a financially secure future.
At David Lerner Associates, we’re dedicated to helping families achieve financial literacy and security. Contact our team of experts for guidance on how to best educate your children about finances. Let’s work together to build a strong financial foundation for the next generation!
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.