Finance education

Top 10 Financial Tips to Teach Your Children

By: floydburton
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It’s easy to forget that, generally speaking, children get no formal education in the world of money. Unless they pursue a career in economics, odds are that they will have to learn from experience. However, with the right help, you can instil some crucial understandings of finance in them from an early age. These formative lessons can have a huge impact on how your children learn to handle money and can make a huge difference in the future. We’re going to look at ten great tips that can have a major effect on their understanding of money.Communication Is Key to a Full Understanding

  • It’s important that you don’t make money a taboo subject for your children. One great way of doing this is by ensuring that you regularly talk about it, and have no problems with discussing it with your children. Naturally, many of the more complicated concepts will be inaccessible until they grow older. But you can still have a shot at answering their questions, and showing them that the world of finance is something that affects everyone.
  • An understanding of loans is crucial if you want to make sure you don’t end up saddled with debt. It’s worth making sure that your children understand how they work, and the pitfalls that can befall you if you don’t pay attention to the terms. Debt is not a good thing, and can easily ruin a life. However, in cases such as mortgages, there are few other options. Make sure that they understand the concepts of interest, fees, and the issues that can arise from irresponsible borrowing.
  • A healthy approach to savings can lead to a lifetime of sensible financial decisions. You can always start at the very beginning, giving them a piggy bank and a regular amount of pocket money to make use of. Instil an understanding of the importance of saving, and not only will they enjoy the knowledge that they have money in the bank, they will also retain the habit for the rest of their lives.

 

Start From the Earliest Age Possible

  • It’s worth going with them to open a bank account or similar from a fairly early age. It’s important that, as soon as possible, they come to an understanding about the realities of banking in this day and age. There are few bands around that are not liable to pull the carpet out from under you if they feel like doing so. If your children know how terms and conditions work from an early age, they can benefit from a healthy mistrust of banks that could make a real difference in the future.
  • A great way of getting your child understanding money from an early age is through games. For instance, the classic Monopoly makes use of concepts that can be easily understood, and are relevant to later life. Even something like the trading game Settlers of Catan demonstrates that sometimes, saving is better than spending. And there are plenty of strategy games that show how a firm foundation is crucial for making the most out of your funds.
  • There’s no shortage of baffling terms and conditions that exist in the world of finance. It’s worthwhile, if such a thing comes up, that you explain to your child exactly what all these different terms mean. Sometimes you may not be entirely sure yourself. But a thorough understanding of the jargon of finance is key to keeping your head above water, and your funds where they belong.
  • By giving your children small goals regarding their finances, you can let them get an early exposure to the ways that finance works. Saving goals are a good example, especially if they want to purchase something but do not currently have the necessary funds. This can become the foundations for a later understanding of the way budgeting works and the need for patience ahead of instant gratification.

 

There Are Many Important Lessons that Can Be Learned

  • Shops are a great way of exposing a child to the world of finance. A practical understanding of the way money works, and the way to judge a worthwhile purchase is a great thing to instil in a child from an early age. It’s also a great way of demonstrating the importance of budgeting, and the need to prioritise some purchases over others.
  • Make sure that you communicate with your child, and give them an understanding of why you make the financial decisions that you do. If they don’t understand what motivates your decisions, they may feel that the world of finance lacks any kind of sense. By making sure that they understand, you can pull back the curtain on the world of spending and saving.
  • It’s worthwhile for introducing your child to money from an early age. If they can count, they can start understanding values and denominations, and work out how it all works. You may have a hard time explaining to them that money is just an arbitrary social contract, but that will become easier with time.

These are just a few great ways to introduce your children to the world of finance from an early age. There are many lessons to be learned, and if they carry them into later life, they can potentially avoid a world of problems. Start them young, and they’ll thank you for it one day.

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