Important tips to help prepare youth for financial wellness
Friday, February 10, 2023
Financial wellness starts with an awareness of money and savings early on. There are many lessons to be learned, and there could be some pitfalls on the way. New lessons and concepts will appear during different stages of your kids’ lives. Teaching them will require some planning, intentionality, and patience on your end and practice on theirs. However, it will be time well spent and your children will thank you for it later as their earnings are well spent (and saved)!
Money need not be a taboo subject, and the earlier we start talking to our youth about it, the better they will be at making prudent financial decisions later in life. Not sure where to start? Here are some tips to help teach young ones about money and how to achieve financial wellness at various stages of their lives.
Be intentional when discussing money
Most children start to form thoughts, feelings, and opinions about money from watching their parents. This happens sooner than many expect. Children may observe you at the store or overhear you discussing the monthly budget with your partner. This is a great opportunity to get an early start guiding them into financial literacy and encouraging questions along the way. The best way to empower them is by being a good role model yourself.
Talking about money does not have to be awkward! Try to normalize financial concepts slowly by introducing them into your daily conversations. Look for opportunities to explain what money is, how it works, and your thought process on deciding when and where to spend (or save) it. As the kids get older, expand on the art of budgeting, how to recognize “wants versus needs,” and the importance of opportunity cost and delayed gratification.
Teach them the value of earning money
Once your kids understand what money is, show them the importance of earning it. Consider giving them an allowance — perhaps start with a certain base amount weekly, monthly, etc. — and offer them the chance to earn more if they take on additional household chores. When they’re old enough, encourage them to take on a summer or part-time job. The objective is for them to have their own money and the opportunity to make decisions on how to handle it. This new cash flow will show them how a budget works in action.
Focus on the benefits of saving
Once they are earning money and having a little fun spending it, it’s a good time for youth to refocus on the benefits of saving. Learning how to save is one of the most important lessons your kids will ever learn about money. Being disciplined and spending less than you earn while being smart with your savings is the fastest road to financial independence. Have them learn to budget by allocating money into three chunks: spending, saving, and perhaps giving if you’d like to educate your children about being charitable. Help them understand how to allocate money to their short-term cash needs and to save what’s remaining. Stress the importance of flexibility and how saving will help them meet future goals.
With younger kids, you may have more success by teaching them about short-term goals and planning — perhaps start by saving from a few allowance payments to accumulate enough money for a new video game or toy a few months from now. The older ones can focus on longer-term goals such as saving for college, a new car, down payment on a house, wedding, retirement, and other adulthood expenses.
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