Many people find saving money to be difficult because they never had the proper financial education as children. Finances is an extremely important part of adult life and yet many adults never teach their children about its intricacies. Investing is an extremely complex topic and unless children learn about it from an early age they may never be able to invest or save their money properly.
Many parents hesitate before teaching their children about investing because they are not certain about how to do it themselves. Investing does not have to start with developing a complex stock portfolio. Children should first be taught about the benefits of saving their money. An easy way to teach children about saving money is to give them a weekly allowance which they can either choose to spend or to save. After this, a parent can refrain from buying them unnecessary toys or luxuries. Children will soon learn that if they want something they do not need they will have to learn to save their allowance to get it. Children can be taught further lessons by being allowed to work or do chores in exchange for a small fee.
After learning the basics of savings children can learn more about banks and interest. A parent can help their child open their own savings account and make deposits. Parents can also show their child how the interest accrues and how this means extra money in their pocket. Finally, parents can move on to showing their children certificates of deposit and other simple investment vehicles. When a child has a birthday or when Christmas comes up parents can invest in certificates or bonds with them to show them how they work. Finally, once a child understands banking properly the parent can get them their own checking account and allow them to control the funds. Debit cards will serve as an excellent introduction to credit cards.
After the child has the basics of banking down parents can begin explaining stock portfolios and more advanced investment strategies to them. Many adults do not properly understand the stock market but it is possible for the parent to let their child sit in on their meetings with their own financial adviser. Through this children can also learn about retirement accounts. Parents can also involve the child in the management of their college fund by explaining to them the choices that they have made and how it has benefited them.
Parents who are very concerned about their child’s financial learning should push to involve programs about financial health in their middle school and high school. Today very few children learn anything about their own finances in school even though their own finances are extremely important. Parents who are on the parent teach associations at their local school should push for at least some financial seminars much in the way that children get sex education. By increasing the overall knowledge of students parents can make sure that their children will make sound financial decisions in the years to come.