How to teach your kids to be financially independent adults
There should be some classes in elementary, middle school, and high school about finance. But, in most states, basic finance is not mandatory. So, it leaves it up to the parents to teach their kids how to be financially independent adults. While many of us were not taught young, we can teach our kids what we wish we would have known before we became adults. But, where should you start? Here are some tips for raising kids to be financially independent adults.
Start with basic budgeting
Introduce your children to the concept of earning money and spending mindfully when they’re young, and build upon that as they grow up. Preteens can watch you work on an actual budget, and teens can even assist you in creating a budget for a significant expense, like a family vacation. You can also help kids create a budget for how they plan to spend their own money.
Split the costs of “must-have” items
If your kids are like most, they’ll likely be asking you for all sorts of trending items they claim they absolutely need; from a pair of designer jeans, all the in-kids are wearing, to the latest fad toy they insist their entire class already has. But, you know your budget and it does not always fit, and even if it does, this is a great opportunity to teach them about wants, needs, and the true cost of things.
A good way to teach them is to create a compromise. Have them work for and pay for half of the items that they need so desperately. When it comes to their hard work, and own money, they either decide they don’t need the item, or they will treat it better if they earn it. Either way, you both win.
Teach them about credit cards
If your child sees you using a credit or debit card often, teach them what’s behind that card. Show them your credit card bill when it arrives and talk about how you need to pay for all those expenses during the month, plus the possible interest. Teach them about debit cards, too, explaining how money is withdrawn from your checking account each time you swipe the card. You can also give older kids a quick rundown on credit scores, how they work and why they’re so important.
Talk openly about what they can expect in terms of support for the future
When your child is mature enough to discuss the future, discuss how much financial support you plan to offer. At the same time, they attend college immediately after graduation and into their adult years. Ask about their plans and pay attention to when they anticipate being financially independent.
You can bring up the topic of career paths, too. Help your child determine a basic budget for the lifestyle they plan to lead and assist them in narrowing down their career choices until they have just a few that will support their future life. Talk about student loans, too, and explain how crippling debt can be.
Use the tips outlined above to help raise your child to be a financially independent adult. The earlier they learn important money lessons, the better off they will be in the future. What are some ways that you have helped your children understand finance and money? Share them below. And, if you liked this post, make sure you check out our other MoneySmart Tips posts.
