Pass Financial Smarts Onto Your Kids

Published on April 15th, 2015

Financial smarts can start at an early age. In fact, the earlier your child learns how to handle money responsibly, the higher the chances for financial success down the line. It can be tempting to always say “yes” to the toys and treats your kids ask for, especially for parents with busy schedules, but follow these tips and your son and/or daughter will thank you in the future.

#1: Start teaching your kids about money around age 11.
There are books out there with the intent to teach children about making, saving and investing money. Sit down with your kids for a few minutes each month and read through one of these books, explaining the concepts and answering their questions. This will help children realize they will be in control of their own success.

#2: Give your child an allowance and set some rules.
Require your kids to split their allowance into four sections: spending, saving, investing, and charity (of their choosing). Giving money to charity helps a child develop empathy for others. Saving allows the child to buy a toy later if he or she wishes; more often than not, they will decide the toy isn’t worth it. If a 7-year-old invests $250 each year in a diversified stock fund earning eight percent annually, they will have $338,367 by age 67.

#3: Learn to say no.
If your son or daughter doesn’t want to invest or give some of their allowance to charity, tell them they won’t get an allowance. If they want you to buy them something at the store, you can say no. This won’t guarantee the child won’t become spoiled, but it will teach them that almost everything in life comes with a price.

#4: When they get to the appropriate age, require your child to get a job.
The minimum age to work for pay is usually around 15 or 16. Having a job teaches a teenager to work hard and responsibility, not to mention motivation to get a college degree, and therefore a better job. You may also require that they split up their paycheck similarly to above (spending, saving, investing, charity). The lessons learned from a part-time job can last a lifetime.


Courtesy of US News Money

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