As a parent, you want your child to have as much information about the world as possible before they grow up. It’s every mother and father’s dream to see their son or daughter grow into a mature and responsible adult- especially when it comes to money management. According to recent research, Freedom Debt Relief has found that parents have a limited window in which to help influence the financial behavior of their child- usually only until about age twelve to fourteen. After this time, the outside world begins to have more of an effect on how the child views financial matters, so it’s crucial that parents make time to talk to their kids about money when they are young.
Here are a few money lessons that Freedom Debt Relief recommends every parent teach their child to help them grow into smarter consumers as an adult.
The cost of education. If your child wants to go to college, Freedom Debt Relief recommends that parents have a conversation with their son or daughter about the cost of education early. For younger children, this can include lessons about the importance of beginning to save early. For older children and teenagers, talking about college can also include a conversation about loans and the importance of paying bills on time. Having a conversation about the cost of an education can help your child make smarter decisions when it comes to picking a school or going into debt to afford college.
Smart lending. Parents should also teach their children the risks that they take when lending their friends money. Freedom Debt Relief recommends using a method that is easier for younger children to understand so this lesson can be taught early. For example, telling young children that, while sharing toys might be okay, loaning money means that the child may lose both the money and the friendship should his or her friend be unable to pay them back. Older children should be taught about the importance of splitting costs when paying for dinner, tickets, or rides, and can be introduced to money sharing apps like Venmo that make splitting the bills easier.
Common scams. Just like you teach your children never to get in a car with a stranger, you should also teach him or her never to trust a stranger with their money. Use spam and scam emails to teach your son or daughter that not everyone on the internet can be trusted; instruct your child never to respond to emails that request money, or wire money to anyone that he or she does not know, even if they are offering big bucks for payments.
The importance of saving. The importance of saving money is a lesson that can be taught to even young children. Open a savings account with your child, and have them choose a larger item they want to save up for (like a new video game system or bicycle) and ask them to put a percentage of their allowance earned from doing chores or money given to them by family members for special occasions toward their big purchase. You can even offer to match the amount of money they put into their account to encourage even more saving. By helping your little one see the benefits of working towards a bigger purchase, they will be less likely to want to spend all their money the second they get it.
When it comes to learning about money and saving, Freedom Debt Relief has found that getting involved early matters. Teaching your little one about the importance of saving and staying smart about their money will help them to be more effective consumers later in life. If you’ve been putting off having a conversation about money with your little ones, now is an excellent time to talk!