Financial advice for kids is an important topic to cover as you are raising your kids. Teach your children about money starting from an early age, because the more comfortable and well-versed they become with money, the better off they are as adults. It is ideal to consider the age-appropriateness of the way you give financial advice for kids, so that you can be confident that they are able to understand the concepts you are teaching them, which ensures greater success in their own financial dealings later in life.
Consider that the financial advice for kids needs not only be age appropriate and will not be as advanced as married financial advice, but it needs to also prepare them for the actual financial situations and decisions they will need to make in our society. For instance, while saving is touted, it is good to also balance that teaching out by educating your kids on the prospect that at some point they may need to borrow money for perhaps college. Credit does not have to all be bad, especially if used responsibly.
And, that touches on another aspect of money: financial responsibility. While you may be clothing, sheltering and feeding your kids now, you may want them to understand that they need to maybe save part of their allowance, or part of that birthday money that grandma sends every year. You may first obviously need to teach them how to count. Depending on the rate of their mental development, this can take longer than you would like.
Additionally, even if, say, a 6 year old can count, they physically need to see and touch the money. Electronic funds transfers, debit card transactions and credit card purchases may confuse them just yet. Though, it is important to continue teaching them, what you can about those financial avenues too, do not expect them to fully grasp abstract concepts until later. Just as they are very literal in their understanding of language typically at this age, they cannot usually grasp abstracts.
When they are 8 or 9 they might start being able to handle division and multiplication, they still may at least truly understand why they are given change when they make a purchase in a store. They will start to truly understand that they are exchanging money for products. With that in mind, they might also be ready to understand what checking and savings accounts are. They may or may not completely understand everything that goes on in their accounts, but that is ok.
Financial advice for kids can also involve taking your kids to a kid-friendly bank branch, where they will be taught about their money. It is important to show them what happens when they save money. While it may not be a ton of interest, it is good for them to see that the bank adds money to their account when they save. Again, though, it can be difficult for kids in general to grasp the concept of money until they actually have to pay bills. Though, you can help in the manner that you teach them.
When they are still older, in their pre-teens and early adolescence, you can begin working real money into teaching them about investing. Financial advice for kids can be kind of fun, because while there are stock market simulation games out there, it could be better if there is real money, say a few hundred dollars, to teach them about retirement accounts. They may like helping themselves learn about your 401k and Roth IRA.
This will enable you to open investment accounts for your teenagers. They will at least understand that money compounds when saved and investments can pay off in the stock market. Combining those two elements, they can have the freedom to put money into retirement-accounts early on to enjoy compounding interest and time. This is prudent financial advice to provide.
It is also important to be equally vigilant with the language and attitude you use in regard to financial advice and money because the goal is to empower your kids. If you have a struggle mentality, they will soak that up just like all the other advice you teach them, whether deliberately and directly, or implied and indirectly. Financial advice for kids needs to also allow them to see that life is a series of choices. Oftentimes, good choices and advice make life comfortable, while bad choices and bad advice makes life unbearable.
Financial advice for kids needs to start early on in their lives. And, it needs to continue well into adulthood, just like the rest of parenthood with them. Be aware that they are learning from your words as well as your actions and feelings toward money. Take it step by step as when giving financial advice for kids.
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