You can never start too early when it comes to teaching kids about money. When your child has become a teen, it is important that they start understanding the finance world and how to maneuver through it. Here are 10 ways to teach kids financial literacy.
What Exactly Is Financial Literacy?
Financial literacy is the knowledge and skills that help you make smart financial decisions. To have good financial literacy, you need to understand things like investing, saving, spending, and credit. It is also good to teach your teens to look out for financial scams — which also falls into financial literacy.
What You Do Now Can Have a Lifelong Impact
It is important to remind your teen that what they do now can impact them later. Focusing on financial literacy at a young age is a good idea because when you get older, you will have the know-how to have financial wisdom and to lay a good foundation for your future. And it’s always nice to have money!
Try to Break the Debt Cycle
A lot of people who aren’t financially literate rack up a lot of debt. If your teen learns about finances at a young age, you will be more likely to break the debt cycle. The more they know now, the better off they will be later. The less debt a person has, the more money they will have to do things they enjoy.
Possible Missed Opportunities
If you don’t have money, you might miss out on certain opportunities such as college. Saving money while your teen is young could help them get ahead when they are older. If they don’t save, then they could miss out on a lot of great opportunities.
Give Allowances With Responsibilities
It’s easy to just give your teen an allowance, but what if you added a spin on it? Instead of just giving out their allowance, you can also help them save up their money for something they need. Tell them that if they want something new, they will have to use their allowance to pay for it. This will instill financial responsibility and give them a lesson in financial literacy all in one.
Real-Life Budgeting
If your teen has a part-time job, then you should ask them to help with this household budget. This will show them how to be responsible when spending and give them an idea of how to look at their finances when they are older. They can also learn how to budget for something fun to do.
Help Them Understand Debt
Debt can be crippling when you are older. If you teach your teens about debt when they are younger, they will have a grasp on how to spend wisely in the future. Also, teaching them what happens when you overspend can help them be successful later on.
Set Realistic Savings Goals
Helping your teen set realistic savings goals means they will do a better job maintaining money in the future. Do they want a non-essential item? Help them save for it! This will let them get familiar with the savings process too.
Read More: 10 Money Habits That Millionaires Stick To
Practice Helpful Banking Skills
Opening up a bank account young will be good for your child. They will learn all about the banking process and be able to see a physical representation of their money flow. You can have them open a savings and checking account to teach them financial literacy.
Read More: 10 Creative Ways to Start an Emergency Fund
Plan an Emergency Fund
You never know when an emergency is going to arise, so it is important to plan for them. If you teach your teen the importance of having an emergency fund, they will be ready for the unexpected. Let them know that it is a good idea to set aside part of their income for emergencies, because you never know what will happen.
Read More: 10 Ways to Teach Kids About Money
