In a world of instant gratification, teaching your children financial literacy can be a challenge. Retirement and pension plans, once plentiful in the workforce, are now few and far between, forcing everyone to take more control over their financial futures. Today’s children need to learn to be financially literate much earlier than ever before. The National Financial Educators Council, a coalition of financial literacy experts and organizations, offers the following tips to instill good money habits in your children so they can plan ahead…and aren’t still living at home when they’re 35.
- Relate money to lifestyle. Kids understand that money can get them what they want…right now. Encourage them to think about how they want to live in the future, relating life goals to how managing money now can help them achieve what they want later.
- Help them recognize opportunity. When the economy is down, it’s important to teach children to make smart investments and recognize opportunity and future trends that will impact their future.
- Savings plan. Living independently is becoming more and more difficult for new graduates. Teaching kids to begin saving as soon as possible can curb an extended, post-graduation stay at home and help your kids build a life of their own sooner, rather than later.
- Build a solid financial foundation. Open savings, checking, Roth IRA and brokerage accounts for your children as soon as possible, even if there is little to no money to put in them. Opening these accounts will encourage children to save, invest and have an overall interest in how the financial world works.
- Power of compounding interest. Children have the advantage of youth. Help them understand the tremendous power of compound interest. The earlier they start saving, the better off they will be in the future. iBi