Children and Money
Many adults believe that the topic of money is too complex for children. However, this type of mindset can be harmful to a child’s financial future. Money is a topic that should be taught to children at a young age. Financial literacy is like any other learned skill the younger you learn it the earlier you can master it. One important thing to teach your child is that money is as much about behavior as it is knowledge. Think of money like laying bricks. You can learn a lot about laying bricks from the internet and crafters, but if you never use that knowledge you won’t ever build your wall.
Often parents can find it hard to be transparent with their children when it comes to the topic of money because of their lack. Sometimes it’s lack of money and sometimes it’s lack of knowledge, either way, there are ways to teach your kids about money without telling them all your dirty details. It’s essential for them to understand the concepts of money and basic knowledge.
Financial Affects on Teens
In 2012, 83% of teens were not able to manage their finances. Like adult’s teens are emotional buyers. They buy the things that make them feel good or the things their friends have. Unlike adults, most teens have no or minimal financial responsibilities. So, teenagers have more freedom to buy what they want because their needs are met. The problem with this is as they get older its harder for them to cope with the reality of managing their finances.
Some Ways to Help
Ways to help your teen better understand the importance of money management is to put them on a budget, let them pay their bills, or become their landlord. Sitting with your teen and helping to come up with ways to make income can be beneficial. No matter if they get a part-time job or create a business they will have learning opportunities from working.
Putting a teen on a budget is helpful. Even if the small budget only has a few items its good practice for the future. Having a teen pay their cell phone bill, car insurance, or future college bill can give them real life experience what responsibilities. And helps to build character. Making your teenage pay rent can be a little extreme but can work beautifully. A $200 or $300 monthly rent bill will teach them so many financial lessons. I would save the rent in investment for their future. I would give them a nice lump sum
before or after college. But that’s just me.
What to Know Before College
As teens get older, they become young adults with the same financial illiteracy. Only 24% of millennial showed basic financial literacy in a NEFE study in 2017. Stop for a moment to remember your transition
from being a teen to a twenty-something. Although you were smarter, there was still a lot to learn. Do you wish you knew back then what you know now about money? Why not stop and take time to teach your children those lessons you have learned. No matter your child’s path they will be better for it.
One choice teens and twenty-year-old must make that will affect them as adults are how to fund their college educations. This choice can cost as much as a car or a house. Most teens have no idea what they
are doing when this crucial choice is made. In 2015 the NFCS data showed that a whopping 54% of student loan borrowers have no idea of their future loan payment amounts. This means that 17 and 18-year-old sign paperwork for loans for thousands of dollars with no clue of payment amounts and no
plans on how to make money for the payment. Helping your future college student do the math can be excellent service. Just this one decision can create a world of difference in their future.
Take the Time
Teaching kids about money young can change their life. Money touches almost every part of our lives. Why not take a few minutes here and there to explain it to your little person? Taking time from your busy day to have a conversation with them about saving, giving, spending, and earning can be priceless.