If you’re old enough to be worrying about your finances, chances are that at some point, you’ve thought to yourself, “I wish I had thought about this earlier.” The good news is that you can do something to prevent your children from suffering that same fate.
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No matter their age, kids are exposed to money on a daily basis and will no doubt start asking you questions about it. Helping them understand how to be responsible about their finances from an early age can help them avoid financial blunders like taking on too much consumer debt, saving too little and not understanding the importance of investing. Here are some ways you can start teaching your kids about money, which will help them on the road to financial literacy.
1. Help them earn money.
No matter how old our kids are, having a means of earning money is an important start to recognizing the value of a dollar. If your kids are young, you can institute an allowance by having them do chores around the house. If they’re a bit older, help them network and apply for local jobs, whether it’s a babysitting gig or a waitstaff position. Once they are earning money on a regular basis, you can help them start to understand how much things cost (for younger kids) or how to set up a reasonable budget (for high schoolers).
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2. Find something they want to save for.
One of the most important parts of teaching your kids about money is helping them learn how to save. Learning to live on less than they earn and understanding how much money paying cash can save them vs. having to pay interest on a loan will help them tremendously over the course of their lives. They’ll have little to no debt, benefit from compounding interest and never live above their means, all things that will leave them in excellent financial shape.
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3. Read a book together.
There are a ton of great books out there on topics that range from budgeting and saving to the basics of investing. Pick a subject that your kids are interested in learning about and set up a plan to read a book on it together. The book will teach them important financial concepts and if they don’t understand something, you can step in to have a conversation about it. Having your children read material on an unfamiliar topic will no doubt help them start a healthy conversation with you about questions they have related to managing money and you may learn something, too!
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