We all hope our kids will grow up to be money smart and able to manage their finances effectively. Teaching kids to be money smart from a young age is essential, but not always easy.
Here are some essential tips for parents who want to raise money-smart kids:
Talk to Them About Money
Conversation is key when it comes to raising money-smart kids. Be open about money and savings with them and explain how you are managing your own money.
If you’ve set up a savings account specifically for your children’s future or opened a savings account in their name, such as a junior ISA account, make your kids aware, explain how it works, and keep them updated about its progress and what it will be for.
Give Them an Allowance
An allowance isn’t just a way to give your kids money or to reward them for good behavior. An allowance is an effective teaching tool that encourages children to learn how to manage and save their money.
Let your kids save up for toys or new tech, offer to split the cost of expensive purchases so long as they save up their half, and avoid tying their allowance to chores or good grades.
An allowance should be a teaching tool rather than a disciplinary tool.
Set Goals Together
If there’s a toy or video game or item of clothing that your kid wants to save for, why not make financial goal setting a shared activity?
Work out together how your kid will save, how they might make extra money to meet their goal, and how long it will take.
Setting your own financial goals alongside them will also allow you to lead by example.
Give Them a Debit Card
Young kids will be fine using cash, but as your kids grow you may want to give them a prepaid debit card.
This will be closer to how adults manage their money and allow your kid to make online purchases, make cash withdrawals at ATMs, and view their account balance online or on an app on their phone.
This list of the best debit cards for kids is a great rundown of what’s out there and what features and benefits you can expect from a kid-friendly debit card.
Don’t Forget About Your Teenagers
You may have been putting in the work to teach your young kids how to be money smart, but the work doesn’t end when they start high school.
Continue to support them with their money management, budgeting, and saving at a time when they may be making more from allowance or a part-time job and may have bigger financial goals for the future, such as vacations and events with friends.
Raising money-smart kids is the best way to prepare them for adult life.
From encouraging them to save for big-ticket items to having open and honest conversations about money, you can ensure that your kids grow up with financial sense and the confidence to manage their money for the rest of their life.