What You Need to Know
- To save for retirement, clients need to have money.
- One way to have money is to know how to budget.
- Learning how to budget can start with a piggy bank, a weekly allowance, and a toy that costs more than the allowance.
People often begin thinking about their long-term financial future once they have entered the professional workforce and are in a position to leverage employer-sponsored savings tools. Hopefully, the conversations and actions leading to retirement security increase with time. However, kids are one demographic which would benefit from the retirement conversation but are mostly left out.
It may sound premature, but childhood is a great time to learn the habits which will prepare us for our financial futures because that is when we learn best. Although I wouldn’t use the word “retirement” when teaching these values, smart money learnings include the benefits of saving, starting early, and basic education on the importance of managing money wisely.
These are skills anyone under 16 can learn and develop.
Here are five ways to teach kids those same lessons in a manner they will understand.
1. Have healthy conversations about money.
I have actively encouraged my children to develop a healthy relationship with money. As parents, we sometimes fall into the habit of giving our children what they want but leave out the request’s financial ramifications. For example, it is okay to tell children that something is expensive, and if your child wants it, then s/he has to save up for it.
Additionally, talk about money as a tool and an investment, rather than an end goal. If you’re signing your kids up for sports or music lessons, have a conversation about how you are making a financial investment because you want them to build confidence and develop new skills. The goal is to have conversations about money that occur naturally but reinforce respect for its use.