5 Steps to Financial Literacy
Getting your kids to become financially savvy is a challenge these days, especially when everywhere they turn there's temptation to buy, buy, buy. How do you get them to change their mindset to save, save, save? Here's a few tips to get you going:
1. Set a financial goal
It's a lot easier to say no to buying the latest phone, shoes, jeans, or gadget, when kids have a specific financial goal in mind that they're trying to reach. Help them set realistic goals -- both for the short-term and the long-term. Whether it's saving $100 for the month, or for the year, the skill of setting and reaching financial goals is a great foundation for their financial future.
2. Give kids an allowance
Many parents give their kids an allowance in exchange for doing chores, or as a way to learn about money. The average is $65/month. Maybe you're in that category, or maybe a smaller allowance works best with your family's budget. Whatever the amount, a regular allowance helps kids practice handling money. Encourage them to remember that there are three things they can do with their money -- save, spend, and share.
3. Let them make money mistakes
Now's not the time to be a helicopter parent. Let your kids make some money mistakes -- better now with $50 than later with $5,000. We all know it hurts when you run out of money for something essential due to lack of planning, or excessive spending. A bite of reality at a young age will help them remember more responsible use of money when it comes their way.
4. Encourage working or starting a business
Encourage kids to earn money either by doing extra chores or starting a business. Not only is it a great way for them to reach their financial goals faster, it's a huge confidence booster for them to know they are capable of earning their own money. For those parents with budding entrepreneurs check out Biz Kid$' one-page business plan to get them on their way.
5. Have a regular money conversation
You don't need to be a financial wiz on Wall Street to help your kids become financially savvy. Get the conversation started by having a weekly money check-up with your kids about their progress, and share what you do know about money. Family money conversations can open the door to learning from each others mistakes and successes. Need ideas for topics? Check out the lesson plans from bizkids.com.