Teach Your Kids How to be Financially Savvy with these 4 Principles

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As Beyond Moms we are constantly juggling businesses, bill management and investing (on top of playdates and food shopping). We might not realize it, but our children are watching, watching how we handle our investing and finances. We are teaching them how to have a relationship with money. Don’t shy away from these subjects, especially if questions come up.

There are perks to having a financially savvy child. Children who learn about money management:

– Tend to be more business savvy in the future

– Grasp money principles that could lead to entrepreneurship

– Have less debt and credit card spending

– Make better investors in the future

With the right love and guidance your little one could be the next Mark Zuckerberg. An easy way to help kids think of money is to start with their allowance, or any other money you give them. The key is simplicity. It’s best to show every dollar has a “job” or a “chore” attached to it. Kids can relate to this, especially if you make it a game.

Here’s how:

Initially create money jars labeled “spend” “save” “donate” and “invest”. Having them visually understand these core principles helps rationalize what to do as they get older. Explain what each word means and perhaps tell your own stories that bring these topics to life. 

Principle 1: Teach Saving Effortlessly

Having a goal like saving for college can be hard for your kids to think about. However, saving for the near future isn’t. Try teaching them to save for a toy or a fun trip. Let them choose what to save for.

Principle 2: Reduce The Appetite For Spending Money

Our kids want many things they don’t need, but in the moment it seems like life or death. To reduce spending have your kids look for coupons to buy items they want. Have them understand the less they pay for an item, the more money they will have in the spend jar for later. The search for the coupon process may even delay the purchase and subdue the need for them to buy at all. All around, the process teaches patience.

Principle 3: Understand The Power Of Investing

For every dollar you invest, it gives you more in the future. Though investing might seem scary, women typically make better investors than men. For every dollar your child adds to the “investing” jar, at the end of the month you add 5 cents. This will show the power of compound interest and returns, instilling the principle of investing. For companies your child loves, try buying a stock. This will help them grasp ownership.

Principle 4: Teach The Joy Of Giving

When spending money, it’s important for your children to understand other children may not have as much. Explain that everyone’s “spend” jar doesn’t have the same amount and they can give from their “donate” jar to help out. This will empower them toward action. When I was a child my mother often gave me one option. I can buy something new, if I gave something away. I often found my appetite for what I originally wanted disappeared. When your child puts money in the donation jar, let them decide the family or foundation they’d like to give it to.

Money doesn’t have to be a dirty subject- it can be one that is empowering and exciting. These conversations and exercises will help create an environment that supports healthy perspectives across the board. 

By Angela Matthews

Angela Matthews is the Founder and Marketing Director of the Mindful Investors Club. Angela created a movement called the Happy Investor Method which has taught over 1,500 professionals how to investest in the stock market. Her techniques are simple and conscious driven.  

You can find out more or join her online investing boot camp at www.happyinvestormethod.com