June 20, 2018
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The Financially Educated Child

Children learn about money from a very young age. Most of what they learn is caught, not taught. They quickly realize that money is exchanged for goods and goodies.  But, do they learn its value? Many adults today are evidence to the lack of education parents provide their children in regards to finances and a lifestyle of financial freedom.

It’s not too early and it’s never to late! With credit cards and lines of credit the lifestyle norm, it can be a challenge to instill good spending and saving habits. This is especially true if you are a parent who struggles with this yourself. However, as you teach your children, you’re also reminding yourself of the importance of wise financial choices. Talk to your children as you make store purchases, pay bills, deposit checks, etc.

Consider ways your child can participate in the learning through earning allowance. Discuss and list age appropriate duties, along with the expected completion time and the amount they will receive. Encourage continued learning and practice with these basic topics and tips:

1. Budget

Start out with a basic budget. Keep it simple in structure and easy to follow. Use pictures or diagrams for added visual effect, like graphs that grow with their savings. Teach them the concepts of income, expenses and tracking financial progress.

2. Save

Set the stage for savings as a way of life. List it as one of the first expenses in their budget. Encourage their excitement in watching it grow and remind them of its importance. For younger children, selecting and purchasing a piggy bank is a fun and motivating way to promote this step. For older children, consider opening a savings account. Teach them the difference between saving for the long and the short term, and encourage them to come up with a purchase they can work towards as a reward.

3. Give

Establish generosity and charity. Have your child set aside a portion of their earnings to be spent on others. This helps them to consider the needs and wants of those around them and instills good character traits, which adds to the quality of life.

4. Spend

Explain the difference between needs and wants. Give examples from everyday life.  Help your child understand expenses, like bills that must be paid, and optional spending, like entertainment, eating out and vacations. For the older children, give more detailed explanations on topics like fixed and flexible expenses, ATM transactions, savings and checking accounts, online bill pay, etc. As their learning capacitates, educate your children on the negative effects of credit card debt, while teaching them to live within their means.

Remember, children learn more from watching your spending patterns, so lead by example. But, don’t underestimate the effect of communication and education. Help them build a strong financial future by teaching them good financial habits and the value of their hard earned money!


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