Many schools around the country do not require any type of personal finance class. This means, for many students, they are going out into the real world with very little basic knowledge about how finances work. Here are some financial topics that parents should work on with their children.
Even from a young age, you can start teaching your kids about financial literacy. This includes differentiating between wants and needs, making mistakes when it comes to their spending decisions, and learning how to save.
KEEP THEM INVOLVED
While it’s not necessary to sit down with your child and go through your budget line by line, you should keep them involved in some money discussions. If kids see the process of budgeting and saving for something they want to purchase, they are more likely to model this behavior when they start making money.
MAKE THEM RESPONSIBLE
Once your child has a source of income, have them be responsible for some of their wants. Come up with a plan that dictates which items for which each side is responsible. For example, a parent could say they’ll cover the cost of the car and car insurance but their teen is responsible for the gas and oil changes. Having more expenses will teach a teen how to budget.
Many teenagers go out into the world without knowing how to carry out basic financial tasks, such as doing their taxes, how credit works, or how to write a check. Stress the importance of having an emergency savings account and saving for retirement. Kids learn best by example, so try your best to live your best financial life as much as possible.