Money management skills lay the foundation for lifelong success, and the path to financial wisdom begins in childhood. In recognition of Financial Literacy month in April, we’re proud to announce the launch of SageVestKids, a website dedicated to helping you raise happy, financially wise children through developmentally appropriate activities and responsibilities.
Our new site has already been recognized by CNBC, Investment News, and Yahoo Finance as a rich resource for financial literacy, and we encourage you, your family, friends and others to visit kidsfinancialeducation.com for more information. Below are some of our top tips in brief to help you guide your kids towards financially rewarding lives.
Teach Financial Responsibility Through Independence
One of the best methods of learning is through hands-on experience. Engage your kids as soon as possible in their own money management (with appropriate oversight), and introduce new age-appropriate responsibilities in a continuum fashion as your child grows. Financial elements to focus on include assuming purchasing decisions, managing an allowance through budgeting, saving for short- and longer-term goals, learning about banking, valuing the importance of work, and more.
Instill a Healthy Attitude Towards Savings
Promoting a strong savings ethic is one of the most valuable lessons you can teach your child. Learning to spend less than you earn is the foundation of financial success, and learning to set and achieve goals is a fundamental principle that applies to broader life learning too.
There are plenty of ways to support and teach your kids the value of saving, beginning with accumulating spare change in early childhood, through matching savings contributions from high school earnings and saving for college for teens.
Allow Learning from Mistakes
Learning about money is to some degree akin to learning how to ride a bike: You need to fall off a few times in order to learn how to get back up again.
Allowing your kids’ direct involvement in their own money management means that mistakes will happen along the way. Be sure to offer constructive advice and support in these situations.
Another recommendation and one that might seem counterintuitive is to allow your kids to get into debt (in a controlled manner, of course). This offers a valuable opportunity for them to learn about loans and interest, how to get out of debt, or better yet, how to avoid it altogether.
Create Realistic Expectations
One of the best things you can do as a parent is to help your kids understand what real life costs, especially how much money is needed to maintain their current lifestyle. It’s important to be mindful of the expectations your kids are developing, as the lives they live now create the foundation for what your children will hope to achieve as adults. Regardless of if you’re affluent or you simply enjoy creating experiences and opportunities for your kids, it’s important to be mindful of a potential “Wealth Effect” and expectations your kids could be developing.
Be a Strong Steward of Your Own Finances
As with all other aspects of parenting, you continuously have to envision yourself in front of a mirror, asking yourself if you’re setting good financial examples for your kids. No matter how old your child is, you are the greatest influence in how they perceive money and approach finances.
Engage in frequent and open discussions with your kids. Talk honestly about what you’ve financially achieved, the lessons you’ve learned, money experiences that have resonated with you, and wise tips toward financial success. Always try to discuss money in a positive manner and lead through positive examples. Be cognizant of how you manage your money, how you pay for things, your money stresses or exuberances, and even subtle comments that you make about yourself, others, your job, etc.
Understand Your Own Relationship with Money
Part of being a strong financial role model includes understanding money personas and how each of us embodies a unique relationship with money. Take a moment to understand your own relationship with money and the persona you portray. Your child may learn to replicate your money persona or may become the opposite of you. The examples you lead today set the stage for who your child will become tomorrow.
When it comes to financial education, the reality is that there’s a lot to learn by age eighteen. Financial responsibility can’t be learned in a semester or in a classroom. It’s learned over a lifetime. It begins at home. It begins with you.
If you want to raise financially savvy kids, you need to be financially savvy yourself. SageVest Wealth Management can help ensure that you’re on a strong path toward your own goals.
We’re committed to helping you and your family achieve financial success.
