As parents, we have aspirations for our kids. But unless we go further, and provide them with the financial literacy tools to be able to manage their income, all the investment and sacrifice to get them educated may be for naught,” Blayney advises.
Helping your kids learn simple money lessons early on can go a long way toward fostering their financial success in the future. Find below steps that parents can take to ensure they raise “a child with good financial sense.”
Practical ways to raise great kids
• Think carefully about what financial responsibility would look like in your child. Then determine how you would score yourself on these measures – because until you stand tall financially, it’s much harder to get your kids to straighten up and take notice.
• Look for opportunities in your day to turn routine money transactions into teachable moments for your kids. Talk about the role of banks as places to keep money safe and earn interest or explain to older children why you prefer your chosen bank or credit union to another.
• Get your kids involved in household money management. Enlist their help in paying the bills, where they can identify what the bills are for, and circle the amounts payable and the due dates. This provides them with an appreciation of routine living expenses.
• Make money lessons fun and purposeful. Give them a “budget” for a component of the family vacation or even holiday shopping. Invest them in the process, and you may be surprised and pleased with their creativity and financial decision-making.
• Stress the fundamentals. Most personal financial decisions require an understanding of just two essential principles: the concept of “opportunity cost” and the relationship between risk and return. Without a mastery of these concepts, all the education in the world on saving strategies, investing opportunities or spending management is not necessarily going to translate into smart financial decisions.