Educating your children about the importance of finance and prudent investments
Does your child have a firm grasp of the concept of money? Do they understand about currencies, transactions, wages, and investments? Would you prefer it if they learn about these facts sooner than later, to benefit their future? In this modern world, it is important to educate your children about finance. They can use this information throughout their life and become responsible adults who understand the importance of prudent investments and financial management.
How to teach your kids
There are many ways in which you can teach your children about investing and finance. You do not have to go overboard and give them complex investing strategies or multi-page budgets to manage. You can simply introduce them to the various investment options available, and let them try their hand at investing in a secure and educational way. The pointers below should be given consideration if you have a family and want to educate your children about investments while improving your own financial state.
Let them invest in stocks
Open a children’s savings account
Your children should be able to see their finances and understand where their money is being held. The more they know, and the more you can guard against the problems of privilege, the more they will understand and learn responsibility. Opening a children’s savings account and setting up a regular payment can be hugely beneficial. Ensure that you show your children the statements and show them when interest is paid. Aside from the educational benefit, a savings account will help build up a future fund for your children and help with college payments etc.
Involve them in your financial decisions
As stated above, the more a child is involved, the more they will learn and take on board. When you are making financial decisions, it could be prudent to involve your children. They don’t have to have any say in the decision-making process. But, having an understanding of what is involved will help their knowledge and appreciation. You could even set them tasks relating to your budget and allow them to learn how money is used in the real world. A good starting example is going to a grocery store or buying a toy costs money. We usually recommend reading about how giving kids an allowance teaches your child about money.
Ensure they understand the factors of risk and reward
Give them a basic budget to manage
Personal Capital can be used as a fantastic financial management budgeting tool. A budget will contain all your outgoings, investments, and earnings. You can use a budget to track your finances and effectively manage your bills. A way to introduce your children to this method of management is to create a mock budget for them to maintain. This could be something extremely simple. It could detail their pocket money and any children’s savings accounts you have created for them. As they use the budget, they will learn about the management of money and how to keep track of their funds.
Regardless of all these pointers, any activity you undergo with your children should be fun and interesting. Also, remember that they are children and that their concentration span will not be as developed as yours! Try and relate any activity to something they enjoy like a TV show or a book about money, and keep educational sessions to short and regular bursts.