Financial Concepts to Teach Your Kids at all Stages of their Life

It’s quite unfortunate that our school system doesn’t provide our children with classes and guidance on personal financial education. I’ve heard both sides of the story and although I think we could all agree it would be a great addition to the curriculum it seems that, according to a few studies, it doesn’t seem to take hold in an academic environment because kids will be kids (they may “learn” a topic but they may not retain the concepts).

What it means is that it’s absolutely important that you, the parent, takes charge. Not just sitting them down for a “financial talk” but a continual introduction and application of finances as they age.

For the remainder of this article I’d like to share some of these core, valuable financial concepts to teach children at different stages of their lives:

Childhood

A child has no real concept of money until they begin to examine and question an adult’s usage of the items. Once they understand the concept of value exchange they will undoubtedly begin to find an interest in earning their own.

Two core concepts to being this process at a very young age include:

·  The value of saving

·  The value of… value

Saving can be instilled by providing them with an allowance after completing chores or doing well in certain activities as long as you present them with the idea of value. The value of value, in this case, is that they can purchase bigger, better, higher quality items if they are patient.

By helping them understand the concept of saving and how to seek and find real value they will gain the ability to avoid common financial pitfalls such as emotional spending.

Pre-Teen

The pre-teen years will be some of the toughest because they are at an age where the media is focusing all their effort into getting them interested in products, services, and an overall “image”.

Perhaps the best piece of advice you can give your child at this age is understanding the influence of advertising. Strange, yes, but by helping them understand how one is influenced can greatly help them find their individuality. It may *click* with them that they are merely following a trend rather than exploring a different path.

But, kids will be kids, and no doubt they will want to blend with their friends. In terms of financial actions it’s always important to teach them about budgeting at this time. You may increase their allowance to give them greater financial freedom which should help them make harder decisions.

This is also the time when you may want to sit them down and explain the concept of work, higher education, and careers so that they may begin to formulate an idea of what they’d like to do later in life when it comes time for these decisions.

Teen

I would argue that the best financial information you can teach your teenager isn’t about topics like saving money but having an entrepreneurial mindset. If you had taught your pre-teen the value of money (such as saving) then they should be at a moment in their life where they begin to think about where they are going in this world.

Having an entrepreneurial mindset encourages your child to think about business and all that details. This means they will seek a path that will broaden their understanding of business (and its finances) along with developing skills (that will help them earn their keep).

Even if a child does not decide to create a business and, instead, seek a career it will still find its merits because it will help them understand the very valuable concept of time and money.

Young Adult

As a young adult your child is in limbo because they are being bombarded by mixed messages. On one hand they are constantly being told to continue their education while simultaneously feeling the pressure of needing to work to survive (and leave the nest egg).

A young adult entering college, moving in with their significant other, or just going off on their own are at a time when they can make complete financial choices. One of these choices may be to get a credit card which, as we know, can be a great item when used right (like building credit) or a real trouble (if they don’t use it correctly).

Besides teaching them how best to use credit cards I would say it’s equally important to show the options when they slip up (which is very likely because, after all, they’re still young). This includes both proactively and reactively helping them understand the value credit negotiation, teaching them recovery techniques, and, where you can’t provide all the guidance they need, helping them find credit repair services (which you may have used before, too). By revealing the entire spectrum of what they can expect with credit cards they will approach them with a sound mind.

Adult

Adulthood – a turning point in your guidance.

It is at this time that the individual you once held in your arms may be holding one of their own. Their path in adulthood is upon their shoulders. They may settle down. They may travel. They may start companies. The limits are endless.

But there is still much education to be had …

You have years of experience as an adult and no doubt they will continue to seek your guidance as they too mature. This is the time where things are serious. There are items to consider such as the cost of marriage, saving for retirement, inheritance, providing care for when you are older, and more. Use your knowledge and experience the best you can to provide them with a stable foundation for these concepts or provide them with the connections to those that can.

The health, well-being, and financial stability of your child doesn’t stem from you doing all the work. They too need the literacy. Teach them throughout the years. Lead by example. Be there for when they falter. And do the best you can.