A new school year brings a fresh start, not only for our kids, but for us as parents too. If strict bed times, daily chores and regular reading went by the wayside this summer, now’s the time to hit the reset button to get back on track. The school year and all the experiences that go along with it are a big part of what shapes our children. And, as children grow, we as parents must decide if we have met the goal most of us have set – to produce well-balanced, confident, hard-working adults who make good decisions.
Some of the biggest decisions we face in life are financial in nature. What can we do as parents now to make sure our kids can handle these decisions for themselves later on in their lives? Volumes have been written on how our parenting style affects our children. Hover, but not too close. Help, but not too much. I read that “if you don’t want to see your child unhappy, you’re in the wrong business.” It is ok to let your child make mistakes. In fact, it’s downright essential that you do. But, give them the tools they need for financial success. By that I mean give them knowledge. Let them practice the basics of finance now to give them a foundation for tougher decisions later.
Here’s how to start teaching financial literacy to your children now:
Tell them that money is important. Explain to your child that achieving their goals and aspirations is tied to a healthy understanding of money basics.
Make saving second nature. Have your child set aside a portion of any money they receive, whether it is from an allowance or birthday gift.
Get them to the bank. Open a savings account with your kids. Then encourage them to manage it with regular deposits to build a sense of responsibility.
Involve your child in budgeting. The grocery store is a great place to introduce them to budgeting and making choices about what they want vs. what they need.
Teach the basics of investing. Start with lessons on the stock market and interest rates. Using a compounding calculator, like the one at TheMint.org, is a fun way for kids to learn how their money can grow over the years if a small sum is placed into a savings account, CD, money market account, bonds or stocks.
Encourage them to be entrepreneurs. Encourage them to earn their own money. Getting paid to do extra chores around the house, or starting their own "business" like walking dogs, mowing lawns or washing cars around the neighborhood, builds a strong foundation – and work ethic – for the future.
Be a role model. Ensure that you are also making the best choices for your family, sticking to a budget, and not overspending.