A Parent’s Guide to Raising Financially Literate Children

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As a loving parent, you want to do all you can to prepare your child for adulthood. Providing lessons in financial literacy is one way to ensure they will be able to make smart decisions when they’re older. There are many fun, engaging, and useful ways to help your kids learn the value of money while they’re still young. Read on for tips and tricks on raising financially literate little ones:

Help them understand the value of money with an allowance

Giving your kids an allowance can help them understand the value of money—provided they work for it. Even young children can perform simple chores, like making their own bed, to earn their allowance. Tulsa Kids recommends regularly reviewing your allowance policies and discussing them with kids. The point isn’t to use allowance as a reward or a punishment, but as fair compensation for work your child has done.

Show them how to develop a budget

Discussions with your child about their allowance are also an excellent time to bring up budgeting. Sit down with them to draw up a budget, allowing them to understand how to best make use of their cash. For example, if your child has an expensive toy they want, they might set aside a portion of their allowance every week to save up for it. Money Prodigy provides budget worksheets to help kids master financial planning.

If you need some help in the financial planning department, work with a financial coach to learn some skills you can share with your kids.

Be firm when it comes to requests for money or gifts

Kids have all kinds of wants, from toys to sweets. When your little one asks for a gift or money to buy themselves something, it’s tempting to simply say yes. However, if you hand your child everything they want, they won’t learn how to work for it themselves. Parents need to teach their kids these tough “adult” lessons, like how to differentiate between the “gottas” and “wannas”—what you have to do versus what you want to do.

Open a savings account for them and set financial goals

As your child gets older, their savings can progress beyond a piggy bank and into a formal saving account. Most banks offer an option to set up a kid-friendly account with the parent or legal guardian acting as a co-signer. Once you have your child’s savings account set up, talk to them about some financial goals and milestones they might work towards. Revisit their goals annually, adjusting them appropriately with age.

Play games to get them comfortable with numbers

Games are another great way to educate little ones about money and its value. Popular options range from board games like Monopoly Jr. to online games like Peter Pig’s Money Counter. Use these kinds of activities as learning opportunities without detracting from the fun factor. You want to make money accessible and understandable to little ones—not intimidating. The first step of financial literacy is having the courage to approach the topic.

Teach them how to start their own business

As your children get older and start to think about what career they want to pursue, talk to them about entrepreneurship. Many young people focus on traditional jobs without realizing that business ownership is an option. Teach them the basics of what starting a company might entail, like raising funding. For instance, you might explain their financing options to them.

Putting in the effort to raise financially literate children will help them hugely in adulthood. Trust the tips above to get your kids off on the right foot when it comes to money matters.