It’s never too soon to teach your children to be financially savvy. Kids are clever and pick up on big concepts quickly. Start reviewing basic financial habits with your little ones through the coolest world – the world of play – and, before you know it, they’ll be savvy shoppers, philanthropists, and savers with incredible financial literacy.
Save
Many kids love to show off their piggy bank and the treasures inside. In fact, some are so eager to share the wealth that they do so, divvying up dollars and cents to family and visitors. While becoming a philanthropist is wonderful and a must later in life, this is a great time to reinforce the message of “saving” in the “bank.”
When money is in the bank it’s safe and cannot be touched for any reason. Let your kids know that saving is for something special, and also important for risk management and making sure you have enough money when you need it.
Spend
There’s nothing quite like spending hard-earned money – or, better yet, money you didn’t earn but have in your possession anyway because it was a gift or saved up from other sources. Kids may not fully realize the value of a dollar yet, but if you take them to the toy aisle and explain that one Lego set costs $29 and the stuffed animal they’re besotted with is $10 less, they’ve got a decision to make.
Many parents are surprised when their kids opt to come back another time for something better, or budget their dollars and cents right there in between the action figures and board games to afford a little bit of everything.
Earn
If you want to have money to invest, save, spend, and more, you must earn it first. Kids can miss out on this essential element of financial literacy as money tends to come to them through allowance or birthday gifts. Once your kids are old enough to start earning a dollar, though, they will learn quickly how liberating it is to have their own money, and how quickly it can disappear.
Everyone in your family will learn who the savers and spenders are very early on and, just like any skill, the more it’s practiced the better you get at it. The same goes for money knowledge and, ideally, the desire to be savvy about how to save what you earn.
Financial Literacy for Kids
There are, of course, plenty more financial habits to teach your children, from borrowing to investing, but they don’t need to know everything right away. Give them the basics so they develop the understanding that their Tooth Fairy money should go in their wallet or the bank instead of being tossed on the bedside table.
And, of course, you have plenty of options for including your kids in your own financial planning. Talk to your financial advisor about investment accounts for your kids, like a 529 education savings plan or a custodial trust account. Discuss where and when to open a savings account or discuss other options that suit your family’s goals.
Contact Hollander Lone Maxbauer in Southfield, MI, to talk about your financial plan and what you have earmarked for your family.
