Although the coronavirus pandemic has caused some uncertainty in the financial world and the effects will most likely be felt for years to come, now is a great time to teach your kids about money.
As more and more people have embraced the idea of a cashless economy, discussing financial topics with your kids can be beneficial. According to a 2017 survey conducted by T. Rowe Price, parents who discussed financial topics with their kids were more likely (61% vs. 41%) to have kids who say they are smart about money.
Here are a few ways you can discuss financial topics with kids, from toddlers to teens, according to TheSimpleDollar.com.
Topics: Earning, spending, saving, giving
– Allow your kids to earn an allowance by completing simple chores.
– Kids tend to consider their spending choices more carefully when they’re spending money they’ve earned.
– Have them learn to save for more expensive items they might want to purchase.
– Teach your child to give 10% of their money to help others.
How people spend
Topics: Goods vs. services, needs vs. wants, short-term vs. long-term goals
– Help kids learn that money is sometimes spent in return for another’s efforts or services.
– In addition to handling cash for wants, also let your kids do budget-related household talks (planning a week’s worth of meals).
Topics: Credit, debt, interest, budgeting, identity theft
– To help establish a strong credit score for your children, consider making them an authorized user on your credit card.
– Consider setting spending limits.
– Explain that interest means that money grows in value over time.
– Help them keep track of their expenses by setting short- and long-term financial goals.
– Explain the essentials of how to protect their identity while online.
Topics: Work, banking, investing (bonds vs. stocks)
– Having your child get a job helps reinforces a sense of responsibility.
– Have your child open a separate (but monitored) account for their savings.
– Present bonds as the safer option and associated stocks with higher-risk, higher-reward scenarios.
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