Raising money wise children is something all parents can do to empower them to make sound financial decisions when they’re older. Even a child as young as five can understand the basic premise, that money has value, and we use it to buy the things we want. What’s the first thing you can do to help your child become financially aware?
Kindergarten age children know how to count so it’s the perfect time to teach them how to count money. Gather some coins, a pen, and a blank piece of paper. Line a penny, nickel, dime, and quarter in a row down the left side of the paper. Next to each coin write its value, 1 cent, 5 cents, 10 cents, 25 cents. Give your child a few coins and help her count the number of coins in her hand. Then show her how to total the value of the coins. Once she understands how to count out one dollar’s worth of coins, give her a dollar to spend the next time you’re at the store. Knowing the value of a dollar and how choices impact how far money will go is an important lesson to learn.
Older children can be assigned chores to earn money but will need to be taught the importance of saving and spending wisely. If your son wants a new skateboard, tell him he’ll have to save his allowance and buy the skateboard on his own. He’ll need to calculate how many chores he’ll need to perform before he’ll have enough saved to afford the skateboard. Introduce him to the concept of investing by offering to match a percentage of his earnings for chores you deem to be the most unpleasant.
If you want to raise money wise children, having candid conversations regarding the family’s finances will help. Be honest about how much money is coming in each month versus how much money is going out. Show your son or daughter what the household expenses cost, what you’re paying on credit card bills, and what you’d consider unnecessary spending and like to reduce so you can put more money towards an emergency fund and investments. When you meet with your fiduciary financial planner, invite your child to attend the meeting and include them in the discussions you have regarding retirement planning, estate planning, and investment management. The more open parents are about finances, the more financially aware their children will become. If you’d like to make an appointment, call Alloy Wealth Management at 800-689-3935.