The Importance of Teaching Children Financial Responsibility, and How to Do it
There are many ways to educate children about responsible money management. Helping them learn to save money and spend it responsibly can be a difficult task but there are various steps that can be taken to improve their habits and responsibility.
Having good financial skills are tantamount to succeeding in life, especially in the loan driven culture of America. Public schools rarely provide financial education so it falls on parents to show their children proper money management. Since many adults tend to make so many bad financial decisions now, including the number of foreclosures that have happened, as well as the high amount of credit card debt that have led some to last-resort fast cash sources like Quick Wealth Title Loan Financial, it is important that the future generation is taught good habits to improve future society. Children as young as three years old can grasp the concepts of saving and spending according to a study done by the Money Advice Service.
5 Important Lessons to Teach Them
1. Giving children a way to earn an allowance through various tasks will help them conceptualize giving effort in order to receive a reward and it will help them to appreciate the effort of their work.
2. Related to getting an allowance, help them create a budget for expensive items they wish to purchase in the future.
3. In their budget, help them to create a savings account so that they can visualize the reward of their effort continually grow.
4. Their savings account could be used as a good opportunity to teach children about investing. As they get in to their teens, it will be appropriate to teach them about the stock market and to explore different types of stocks and mutual funds.
5. One of the most important lessons children can be taught are the pros and cons of credit. Most Americans make at least one major purchase on credit so it is vital that they understand how to do that responsibly.
The Different Age Ranges that are Appropriate for Financial Concepts
Ages 3-5: This is the proper age to teach children about delayed gratification. At this age, they can grasp the concept of waiting and saving to buy something that they really desire. At this age you can give them a savings jar to gradually add to until they can afford the item they want.
Ages 6-10: At this age, children can grasp the concept of how to spend money which includes creating budgets, setting goals, and creating savings. An activity that can facilitate this lesson is to include them in some small financial decisions such as which items to pick to get the best value at a store.
Ages 11-13: Children in this age range will be able to understand the concept of interest. Using concrete numbers will be more effective in teaching them opposed to using abstract concepts. They can use a compound interest calculator in order to visualize just how it works.
Ages 14-18: At the high school age range it is important to start planning for the near future, which will be college. Including teenagers in the decision making process such as weighing the cost of each school and talking to them about how much you budget for their college fund, will help them to make better decisions in the future regarding large costs such as mortgages.
Financial money management may not be an easy concept to learn, but it is infinitely rewarding. Teaching these concepts from a young age will help children to think of money as a tool in order to fully appreciate their lives.