Tax season is always a reminder of how important it is to be financially responsible. As a parent, this is the time to take your children aside and explain the importance of money and how to handle it correctly. By giving your children money lessons as they grow up, you give them a much better chance of turning into adults who have a firm grasp on their own financial situations. Below is a guide to what kind of money wisdom you should teach your kids broken down by age group.
Ages 3 to 5
It is a good idea to teach the value of money from a young age. Your children should know that money is required to purchase everything in your home and that you must work in order to earn this money. This is also a good time to explain the difference between wanting something and needing something. Teach your children that since every purchase is made possible by hard work, they must be certain that they need the item before buying it.
Ages 6 to 10
Once your children are in school, you can begin teaching the concept of saving. By this time, you can give your children chores to do around the house and reward them with money once these chores have been completed. At the same time, you should set up a system where your child has to split their allowance in three ways: spend, save and give. The savings could go towards a larger purchase later on or even for college, as this shows your kids the power of saving. This is also a great time to introduce your kids to the 3 jar technique.
Ages 11 to 15
As your children mature, you can begin teaching about find great deals. Smart shoppers will look for the lowest price but also remind them that you get what you pay for. This is also a good age to open bank accounts for your children, so that they can keep their savings in the bank. This is also a great age to teach the value of savings and investing, which could encourage your children to put money into other investments in the future. Draw out how interest works to give them a better understanding. Also, because online shopping is so popular, you can start showing your children how to do it in a safe manner. This could include what to look for in scams, how to avoid unnecessary fees, how to know if it is a safe place to put in your credit information, and when not to give away your contact information.
Ages 16 to 18
Once your children are into their teen years, you can begin exploring more complicated financial topics. Show your children how credit cards and loans work, so that they do not get into debt problems in the future. If you are taking out loans for their college education, have them go through the website and documents with you. Point out areas they should check whenever applying for a loan. You can help your teens develop and stick with their budget. It would also be great if you teach them about guarantor loans and how they could help further on in the future.
When your children start working, go over the tax section of their pay stubs, so that they know where their money is going and what information they will need for taxes. You might also want to mention a retirement fund, as it is never too early to start planning, there is a retirement community that offers great services for an affordable price.
Ages 19 +
Eventually, your children will enter adulthood and, hopefully, you will have supplied them with all kinds of financial knowledge. Your children are never too old to learn more, however, so teach them about how to build their credit rating and avoid common money mistakes. Touch on subjects like investment tips, so that they know how to grow their money. You should even walk them through how to do their own state and federal taxes.
The important part is to get your kids involved. While it may be tempting to just do their finances, like taxes and getting loans, for them to avoid the extra work of explaining, that will have harmful repercussions in the future. The majority of schools won’t teach your kids all there is to know about finances and yet it is something they will have to know when they enter the real world.
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