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It’s never too late to gift your children a gift as we begin a new year. Financial literacy is a lasting gift.
Understanding finances early in life will help children succeed at all stages of their lives. It is therefore important to teach your children about money management.
“By providing our children with firsthand experience in earning, saving, and spending money, they are more likely to develop a savvy sensibility and the framework necessary to manage their personal finances as adults,” says Marguerita Cheng, CFP®, a certified financial planner professional and mom of three.
The CFP Board, an independent organization, is dedicated to supporting professional standards and personal financial planning. Here are four key tips to help kids learn about money.
Make money management a family affair. All family members should be involved in financial planning. Discuss with your children how they feel money should be spent. For example, saving for college, vacations, eating out or how to balance short-term indulgences against long-term financial planning goals.
– Model smart spending. Talk to your children about how you spend and save money on a daily basis. Talk to them about how you can save money by using coupons and sales and how monthly household expenses, such as phone bills and water, are included in a household budget. Explain how making turkey soup with leftovers saves money.
Allow your children to earn money. Allowances may not be liked by all parents, but it’s worth giving your child the chance to manage his or her money. This could be a regular allowance or a small stipend or money gifts from family members for special occasions or birthdays.
– Set up a savings program. You can open a savings bank account for your children. Show your children the statements and tell them how money grows. Older children may have access to accounts for deposits and withdrawals to pay for food, clothes and games. Children may make mistakes but they should not be tempted to save them. A single experience with an account overdrawn can serve as a lesson in smart money management.
Visit letsmakeaplan.orgContact us today to receive more financial planning advice and guidance for yourself or your children, as well as to find a certified financial advisor in your local area.
