There’s a reason there are so many financial bloggers on the internet. It’s because so many young people have trouble with finances.
Obviously this wouldn’t be the case if they had been taught to do these things from a young age. But whose responsibility is it? Does it belong with schools or parents?
I think the answer is that both should share that responsibility. However, since most schools won’t teach your kids about finances here are some things they should know.
How to Open a Checking Account
Help your child open their first checking account when they become responsible enough. Let them earn money and deposit it into the account as well as make withdrawals occasionally.
Balancing their statements each month is important so teach them this skill as well. These are things they will not automatically know and school won’t teach them.
Learn to Budget
You can’t rely on the school system because they may not teach your kids about finances. If you want your child to have bright future financially, you need to teach them how to create a budget.
As you teach them to budget you might consider using a budgeting app. This may help you keep their interest and show them how easy budgeting is. It also allows them to budget from their cell phone, if they have one.
Teach your children how to adjust their budget as their income or needs change. This is crucial to their future financial success.
Your children need to learn to set goals and priorities for their spending. Allow them to save money toward a larger future purchase so they learn these lessons.
They also need to work for at least part of their money. Giving them everything doesn’t teach them the true value of money.
School won’t teach your kids about finances so help them learn how to avoid debt. For example, teach them not to use credit cards unless it is an emergency.
Remind them that if they do use a credit card, they should pay it off as soon as possible to avoid high interest charges. If they need to get a loan for college, teach them to how to pay off student loans as fast as they can.
Help your children understand that another way to avoid debt is to not try to outdo or compete with their friends. That type of spending will get them into debt and won’t impress real friends anyway.
Show them that if they get off track with budgeting to examine why so they can correct the behavior and stop it from happening again. Let them know they should not stop budgeting just because of a setback.
Open a High Interest Savings Account
When the school won’t teach your kids about finances, show them how to open a high interest savings account for emergencies. If they start an emergency fund when they are young they will be more likely to continue the practice of saving in the future.
Invest for the Future
Another thing school won’t teach your kids about finances is how to invest for the future. That means it is up to you to instruct them.
Let them know about 401K plans they could sign up for once they get a job that offers them. Help your child to understand that employers contribute some of the money toward these plans. Make sure they know that they should take advantage of this opportunity to invest for their future starting when they are young.
Explain how compound interest works. Show them other investing options too. When they have a greater understanding of how investing is done they will be more likely to start doing it early on.
Watch Out for Scammers
It’s a sad thing that we must teach our kids to watch out for other people that could try to scam them. However, to keep them safe it should be done.
Instruct your children on the best ways to keep their information safe from those who would steal it or their money. You should also make sure they know that not all offers of free merchandise are legitimate. Some are a means for criminals to gain their information or steal their money.
Jeanne is a married mother of 2 children who works as a full-time freelancer and also helps out occasionally on the farm she and her husband own together. Her background is mostly finance and medical office management. She’s currently working to improve her financial well-being and hopes to help others improve theirs as well.
There are many kids who grow up without the knowledge to handle their finances with skill. Parents assume schools teach it and schools assume parents teach it.
Don’t make that mistake. Share what school won’t teach your kids about finances so yours are prepared to care for themselves once they are on their own.
Are there other financial related things you should be teaching your kids?