Personal finance is the art of managing your money to spend, save and invest in a way that helps you achieve your financial goals. Teaching kids about personal finance is an excellent way to equip them with the skills they need to succeed as adults.
Many experts agree that understanding personal finance at an early age can have a lasting effect on their ability to manage their money throughout their lives. However, most parents feel ill-equipped to teach these essential financial principles. Here are four ways to teach kids about personal finance at home:
1. Create a Financial Curriculum for Families
Teaching kids about financial literacy is a lifelong process. This means that even once your child is a grown adult, you’ll likely still need to talk about money from time to time. The best way to ensure this happens is to create an economic curriculum for families - in this case, one that reflects the best practices, goals, and results of your household. This type of long-term plan outlines the topics you’ll cover and the order in which you’ll cover them. But, again, getting books and other reputable sources on this topic is the best idea if you don't know how to start.
This curriculum will be unique to your family. Still, some cases almost always included the importance of saving, how taxes work, how interest rates affect savings, and how to invest wisely. You can also use this curriculum to track your child’s progress and ensure they are on track for long-term financial success.
2. Have Regular Money Discussions During Dinner Time
Kids learn best when they’re engaged and interested in the topic. One great way to ensure they’re engaged during money discussions is to have them take place during dinner. This is a time of the day when kids are usually more relaxed and engaged, making it the perfect time to have some money discussions.
During these discussions, you can talk about whatever is happening in the news about money. You can also choose one or two topics to discuss, such as student loans or investing in the stock market.
3. Help Your Child Set Up a Savings Account
If your child is under 18, you’ll want to ensure that the money you help your child save is theirs alone. This is why it’s a good idea to help your child set up a savings account. Setting up a savings account for your child is also an excellent way to show them how important it is to save as early and often as possible.
Keeping track of your child’s savings account is a perfect way to show them how compound interest works and how it can help them save more money in the long term. You can also use this savings account to show your child the importance of sticking to a budget.
4. Incorporate Games into the Learning Process
Kids are naturally drawn to games, so why not use this when teaching them about personal finance? Many games on the market are designed to teach kids about money and personal finance, such as Monopoly and Life. In addition, plenty of games teach kids about different aspects of personal finance, such as investing and taxes.
You can also create games and puzzles to help your child learn about money and personal finance. By doing so, you can customize the learning experience to your child’s specific needs and interests. If you’re creating your games, ensure that the topics you cover are appropriate for your child’s age and level of development.
Conclusion
Teaching kids about personal finance can be intimidating at first, but it can also be a lot of fun. However, it’s important to remember that your child is probably more interested in the games and puzzles you create than the lessons you’re trying to teach.
Once you learn how to make the subject matter exciting and engaging, teaching your kids about their allowance and personal finance will be a breeze. You can also encourage your child to ask questions about money from time to time. This can be a great way to ensure your child feels engaged and interested in the topic.
