Ever wondered when you should start giving your children lessons on personal finance? Many would suggest that once your child starts earning, you should sit them down and give them the “money talk” but others who believe in the power of “learning from your own mistakes”. While there might be strong points on both sides, ideally, you should start at a young age.
Children start dealing with money at a young age too through their allowance and the money they receive on their birthdays or other special occasions. As a parent, your job should be to educate your child on saving, spending, and using wisely.
Helping Them Step into The Real World
Children don’t stay young forever. Soon, they will grow up and enter the world of credit cards, loans, investments, and bills. This is where you have to pull out the big guns and explain to them how it works. Unfortunately, schools do little to nothing about financial literacy – meaning that you have to take the charge as a parent. So, here’s how you can prepare your children for personal finance.
The Hands-On Approach
As the name suggests, through this method, you will be allowing your children to get the first-hand experience when it comes to finance and management. You can either invite them to join you as you carry out your tasks related to finance or you can take them to the bank to get their own account up and running. Once your child has their own account, they will surely have some questions. This is where you encourage them to reach out to the bank regarding their queries.
If you have a close friend or family member who works in a bank or has a finance-related job, you can introduce them to your child. This might help them get a better understanding of how finances work. Bankers and finance professionals are always keen on helping young children understand how complex finance management is.
Another thing that you can do is discuss with them about credit cards and interest rates. Unsurprisingly, many youngsters do not fully grasp the idea behind interest rates and how they work. If you feel like your children are mature enough to take on the responsibility of a credit card, then you should get them one (you’ll have to cosign it).
With this approach, you can give your child in-depth guidance on how to manage finances. This is, without a doubt, an important life skill that can save your children from grave mistakes in the future.