Want to Raise Financially Literate Kids? Here’s How

Josh Moore of diaperdads.org

Financial literacy is the knowledge and skills to make sound financial decisions. It helps people make smart choices with their money, get out of debt, and build wealth. But this mentality doesn’t come naturally. It requires proper life training and experiences to reach this level.

You can do your part as a parent by instilling financial literacy in your children at an early age to ensure that they grow up to be responsible spenders. Read on to learn how from Seattle Nanny.

 

How to Raise Financially Literate Kids

One of the most important things parents can do for their children is teaching them about money. Financial literacy starts early. And it’s not as hard as you might think to raise a financially literate kid.

Ideas for raising a financially literate kid include:

  • Paying an allowance
  • Involving kids in shopping decisions
  • Saying “no” to money/gift requests when necessary
  • Opening a savings account in their name
  • Finding games/activities to get children more comfortable with numbers
  • Talking openly about money with your child, starting at an early age
  • Teaching them how or helping them to start their own business

 

Giving Kids a Chance to Be Part of the Process

It’s never too early to teach kids how to handle their money. One way is to involve them in shopping decisions by letting them pick out their own clothes, toys, or books. Another strategy is to let them give input on what to buy when you do the weekly grocery shopping.

Moreover, giving kids an allowance also helps teach them about money. The allowance should be a percentage of their parent’s income and not a flat rate. For instance, if your annual income is $30,000, they might get $30 per month or $1 per day. But only after your child completes agreed-upon chores.

This method teaches young kids that rewards come with hard work while they get a sense of responsibility for their spending choices. Furthermore, it will help them appreciate what other people have to go through on a daily basis just to make enough money for necessities like food and housing.

Not everyone gets everything handed to them, as some children are used to having happen in this day and age.

Something else you can do is talk with your children about money from time to time and answer any questions they may have about finance topics like mortgages, retirement savings plans, stocks and bonds, credit cards, interest rates, etcetera.

And there are many fun games you can play with children (even preschoolers) that get them more comfortable with numbers, such as making up math problems or playing Monopoly.

 

Helping Them to Start Their Own Business

Teaching kids how to start their own business can be a great way to teach them about finances. As one idea, you could discuss how you can finance a business. Finance options include:

  • Friends and family
  • Personal savings
  • Crowdfunding
  • Credit cards
  • Bank loans

By starting a business of their own, they will have to manage the financial aspects of it on their own. This might include raising money in order to start the business and then managing expenses as they go along. The ultimate goal is for your child to be financially literate enough to successfully run their own company.

Given how many adults struggle to maintain their finances, it’s obviously a skill that takes time to cultivate – which is why you’re doing a service to your children to start now. Financially literate kids are not only more likely to be successful adults, but they will also make smarter decisions about how to allocate their money.

Seattle Nanny has been Seattle’s trusted child care provider for over 23 years. Call 425803-9511.

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