How to Coach Your Child Toward Financial Literacy
Guest post by Amos Faulkner at domoneywell.com
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If you’re like most other parents, your top priority is for your children to be safe and secure. You want them to have a firm foundation they can build upon when they leave your home — a foundation that helps them do well in life.
There’s no getting around the fact that finances will play a major role in any adult’s life. You may not care if your child becomes the wealthiest person in the world, but you want to help them avoid money management issues in adulthood. These tips are a great place to start!
Spark Their Entrepreneurial Interest
One of the most fundamental principles of any sound financial management plan is to earn money. And these days, there are more opportunities than ever for young people who want to start their own businesses. If your child seems to have an entrepreneurial spirit, why not introduce them to the fundamentals of building credit and starting a company? To run a successful business, you must know how to manage money, and studying the steps required to launch a company will naturally teach your child about healthy finances.
For instance, you could teach them how to start a business without having a lot of capital. Take time to research angel investors, venture capitalists, crowdfunding, small business loans, grants, and all the other ways you can fund a business.
Host a Family Game Night
Children can learn more in less time when they are having fun. Establishing a weekly game night with your family can provide an excellent opportunity for bonding, and if you include financial-based games, you can guide your child toward financial literacy!
Here are a few games to consider that can teach your kid money management essentials:
- The Game of Life
- Act Your Wage!
- The Budget Game
Take Them Shopping
As adults, we tend to overlook some of the valuable opportunities for teaching as we go about daily life. For example, each time we shop, we must make many little decisions that impact our families. Next time you go shopping for groceries, bring your child along with you and include them in the decision-making process.
Give your child a budget and explain your priorities for the shopping trip. Then, show them how to compare products and determine which items they should purchase to stay within the budget while getting your family what you need. While you’re at it, show them how discounts and coupons work.
Work With Spreadsheets
Financial illiteracy is far more prevalent today than it used to be. It seems that kids and adults alike are simply overwhelmed by the prospect of budgeting and money management. However, as long as your kid knows how to use two columns on a spreadsheet, they can quickly learn the basics of budgeting income and expenses.
Download a free printable spreadsheet online designed to help children learn how to budget. Then, walk your child through listing each expense and income source while making room for saving. Once your child has the basics down, you can move on to real-life budgeting scenarios and decisions, which will take time and work.
Openly Discuss Financial Matters
Lastly, discuss money freely with your kids. If you and your spouse talk about the budget, invite your child to listen to the conversation. If you decide whether or not to make a major purchase, involve your child and ask their opinion.
Even if you are dealing with financial issues, don’t feel like you need to hide every detail from your child. Even hearing some of the language and how money management works in real life can become ingrained in your child and help them later in life.
No matter what your child chooses to do with their life, money will probably play a central role in how successful and happy they become as an adult. Consider the tips above for teaching your child the ropes of financial literacy. And keep researching other ways that you can help them develop a basic understanding of how to manage their money effectively.
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