There are many things that parents are responsible for teaching their children in life. One aspect of life that my parents excelled at showing me the ropes to was money. It’s a good thing they did too because the current education system in the United States is abysmal when it comes to teach young people about money, the importance of saving, and overall financial health.
Kids need to know about things such as retirement savings, especially when in their lifetime the future benefits of social security and health care are extremely unclear and shaky at best. Here are some tips to help parents be sure to pass on good financial habits to their kids, which is invaluable experience in the world today.
The most important way my and many other parents teach their children about fiscal responsibility is by simply leading by example. Kids, especially younger children, are very impressionable and learn by merely watching those they are around and look up to. Rather than seeing this as pressure to perform well financially, look at it as an opportunity. This means that you can take everyday things you do, such as looking at prices at the grocery store or researching a product online to get the best deal, as teaching tools for your kids. Explain what you are doing, why it is important, and always keep an eye out for opportunities to explain how finances, savings, and other aspects of financial health work. Additionally, as they get older involving them in the process of purchases and financial decisions little by little will also give them some personal ownership over your family’s finances. I am obviously not advocating for them to make the decisions on 401K investments or purchasing the new family car, but allowing them to sit in on the process can help them learn a lot. I learned some of the greatest lessons about fiscal responsibility by sitting in on the conversations about buying the new family van or meeting with my parent’s financial advisor with them when they had an appointment. Everyday occasions such as these can afford your kids real learning opportunities in their lives.
The second key method of teaching kids financial responsibility is by allowing them to practice it. Help them open a savings account once they are old enough to earn an allowance and teach them about the fees, interest rates, and the importance of saving up for the things they desire. Helping them find side jobs around the neighborhood such as cutting grass, babysitting, or walking dogs will teach them the importance of working for what you want in life. The most important thing to keep in mind is that you as a parent cannot make savings plans or goals for your children. They must be allowed to make mistakes and learn from them, but by starting them early and helping them along the way you as a parent can be sure that your child has the experiences they need to not make larger financial mistakes when they are older when consequences are much greater.
Teaching your kids about financial health is arguably as important as any other aspect of being a parent. In doing so you are setting them up for better financial decisions later in life when the consequences are much greater. Being open about money, its importance, but also the importance of not obsessing over it will ensure that your children have the tools they need to be financially healthy for years to come.
Financially Stephen grew up in a family that preached saving and living below your means. That, in part, translated to his interest in Economics, especially how economics can affect individuals’ financial lives. Through his financial markets class in the fall of 2011, he furthered this interest by analyzing macroeconomic events. Stephen believes that finance, personal finance in particular, is a subject severely left out when it comes to public schooling in this country, and it is a problem that has manifested itself and contributed to many of the problems seen today. He also believes that education is the key to improvement and hopes that through his writings he will be able help people learn about finance, macroeconomics, and how to be financially savvy for the future.
In his free time Stephen enjoys playing and watching sports, wakeboarding, sailing, and country music. At UNC he has participated in Strive for College, UNC Dance Marathon, and UNC Relay for Life.
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