Start Teaching Your Kids How to Manage Money with These 3 Tips
At North Main Financial Group, clients often ask us how they start to teach the next generation, kids and grandkids, about the importance of finances. Many of us are at the age where we learned about general finances at school. We don't see that as much today, so we're intentional about offering up the opportunity to connect with kids to introduce them to the idea of managing finances. Of course, conversations about money will differ depending on your child's age.
It's never too early to start learning about money. If you're in that space where you're beginning to teach your kids or grandkids about finances, there are a few big items to keep in mind. Here are three key things to get you started.
Teach kids how to live within a budget.
Teaching your kids how to live within a budget is a great place to start. If your kids are under ten and receive a small allowance, you don't necessarily need to be consumed with this idea, but you can start small. As kids progress through high school and college, there's a lot of value in helping them understand a budget. Being thrown into the world and learning about a budget in real-time can be daunting. Talk to them about the basic concepts of income, expenses, and discretionary income. The importance of making a plan cannot be overstated.
Teach kids to live within their means.
We say this to kids and adults all the time. Learning to live within your means is vital to being fiscally responsible. You may be thinking, "this sounds like a budget." Maybe, but it also has to do with the decisions they make about what they need versus what they want. It's important to distinguish between needs and wants. Kids may think they need a $250 pair of sneakers, but that might not make sense financially. A less expensive pair of sneakers may work just as well. Help them understand the pros and cons of making those kinds of decisions. Talk to them about impulse buys versus necessities.
Teach kids how to save.
We cannot stress this point enough. It's a lot easier when kids understand what it means to save at an early age. That may start with a piggy bank and then grow into a savings account or other type of investment. Once you build that habit into place, it's something that stays with them. When you do it with smaller amounts, it's much easier as those amounts become larger because that discipline is already in place. If you live up to or above your means, it's harder to pare that down because we're creatures of habit. Teaching kids that if they have $10, for example, to save three, five, or even seven dollars, get them in that rhythm, making it much easier later in life. Of course, the long-term benefits of saving are many.
Teaching your children or grandchildren how to manage their money at an early age successfully will pay dividends in the future. If you're not sure where to start, give us a call. Our team is happy to answer questions and provide the tools you need to get started.
If you have questions about your financial space, call us at (704) 987-1425 or visit us at www.northmainfinancial.com. If you wish to schedule an introductory meeting, we will happily meet with you at no cost or obligation.
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These Blogs are provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of SagePoint Financial.