Financial independence is an important lesson to teach your children, and it can start at an early age. From helping them learn about careers and handling money, to showing them how to create and stick to a budget, there are plenty of things you can do to teach your kids the importance of personal finance. Here are a few tips to get started.
Make your budget a way of life
Many Americans set a budget for daily living in order to stay on top of their finances, and your children likely will, too. This is a great lesson to teach, but it starts with showing them by utilizing a budget in your own household. Make it a topic of conversation as often as possible. Talk about what sort of things are in the budget, such as groceries, gas for the car, and utility bills, as well as the things you can’t include every day, such as toys or video games. Go over special budgets, like the one you make around the holidays or for a home improvement project, or for college, and talk about how that differs from the everyday one.
Talk about how to build good credit
Everyone needs good credit in order to secure a new car, a house, or credit cards, so it’s important to talk to your kids about how to build it the right way. Simply having a credit card isn’t enough. They’ll need to use it and pay off the balance in full at the end of each month rather than sending in the minimum payment. Starting off with this valuable information will help your kids learn not to spend more than they have.
Think outside the college box
Over time, it’s become clear to many families that sending their children to college isn’t the most financially viable way to go, especially if jobs are scarce when graduation time rolls around. It's important to explore options. Instead of sticking solely to the traditional college plan, pave the way for your kids to consider learning a valuable trade. Perhaps a trade school education is more appropriate and of greater interest to your child. Trade schools tend to be much less expensive than most traditional colleges, they require less time to complete a degree, and there’s typically ample work available right after graduation. These professions pay well, such as air traffic controller, dental hygienist, fashion designer, chef, funeral service worker, and many more. Not only is this an option for your kids, it’s something they’ll be able to think about when they’re adults with kids of their own to plan for.
It’s also a good idea to talk to your kids about learning a marketable skill, such as coding, digital art, or web design. Online classes are available to help them get started with this at an early age, and the sooner they’re exposed to these ideas, the better. Talk to them about how they might use their skills down the road, stressing how valuable they are to employers.
Teach them to be leaders
Many smart, independent individuals are starting their own businesses and finding success in a short amount of time. With all the tools available at our disposal, they can build a company from the ground up and run it all online, from the comfort of their own homes. Talk to your kids about how to become entrepreneurial and why it’s so important to have leadership skills in order to take on those roles. Learning to ask questions, be assertive, and trust their creative instincts are invaluable assets for children.
Teach them about how to create an online presence
Social media and online personas aren’t a fad that will eventually go away, so it’s important to talk to your kids now about how to build and maintain their online presence. Being responsible with their posts is a great lesson for them to learn at an early age, since a person’s social media presence can have an influence on their ability to get or keep a job down the road.
Help them create a plan
By the time your child is 18, it will be extremely helpful for them to have a plan for the near future, and that includes savings and having a stream of income that will help them pay for rent, utilities, car insurance, and/or daily expenses. While many parents want to help their kids as much as possible during this time, you’ll be doing them a favor by working with them to create a plan for themselves rather than giving them what they need. If they’ll be living at home while attending college or trade school, work out an agreement that will allow them to pay for a share of the bills while saving for the future.
Make it an ongoing lesson
Making financial lessons an ongoing practice is especially important if you start when your kids are young. You might look for ways you can incorporate a lesson into the grade-level appropriate assignments they’re learning at school. For instance, combine the use of math with balancing a checkbook. If you have a yard sale, let them help with the accounting.
Give them some freedom
When it’s time to teach your children how to handle their finances, it’s a good idea to give them a little freedom. Let them make choices and decisions, even if you don’t agree with them. This is often the best way for young people to learn lessons for the future, and it can help them feel that they’re truly in control. It also teaches regret, which can be valuable in preventing poor decisions later.
Teaching your kids about the value of earning, spending, and saving money is a great way to ensure that they are financially independent for years to come. Keep an open mind and talk to them often about their decisions and how they can make other choices in the future.
If you think your children are at the right age for a savings or checking account, visit Nevada State Bank to get started.