There should be some elementary, middle, and high school classes 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.
Introduce your children to 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.
If your kids are like most, they’ll likely be asking you for all sorts of trending items they claim they 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. 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 the items they desperately need. Regarding their hard work and own money, they either decide they don't need the item or will treat it better if they earn it. Either way, you both win.
If your child sees you using a credit or debit card often, teach them what’s behind it. When it arrives, show them your credit card bill and talk about how you need to pay for all those monthly expenses, plus the possible interest. Teach them about debit cards; explaining how money is withdrawn from your checking account each time, you swipe the card.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.
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 consider 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. What are some ways that you have helped your children understand finance and money? Share them below. If you liked this post, check out our other MoneySmart Tips posts.