For most parents, ensuring their children’s future success is one of the most important goals. Establishing a solid financial foundation early on is crucial. According to a survey by BOK Financial, over a third of parents have concerns about children’s understanding of money. Teaching financial basics like saving, budgeting and understanding wants vs. needs, you are laying the groundwork for a secure financial future.
Here are some benefits of teaching your children financial education.
Emergency preparedness
Teaching children the importance of saving and building an emergency fund instills a sense of preparedness. Introducing the concept of “paying yourself first” by saving a portion of allowance or birthday money encourages consistency in savings and starts building wealth. Then, once a month, take them to deposit their savings into an account where they will begin compounding interest for even more benefit.
Financial independence
Teaching children financial management skills is an essential step that encourages independence and fosters long-term healthy habits. When children learn about budgeting and saving from an early age, they gain valuable tools that enable them to take control of their financial futures with confidence. This independence fosters a sense of empowerment and self-reliance, preparing children to oversee their finances responsibly as they transition into adulthood.
Budgeting foundations
Understanding wants vs. needs is one of the most important parts of budgeting. This concept can be taught in such a way that children understand and can effectively utilize it with their own spending. Teaching children to trade immediate wants, like a small toy or candy, for future goals, like a Nintendo Switch, helps them set financial objectives and prioritize meaningful purchases over impulse buys.
Responsibility
Allowing your children to manage their own money is a fundamental aspect of their financial education journey that promotes accountability and responsibility. When children are trusted with their own money from allowance to birthday money, they begin to understand the value of money and make thoughtful decisions. Working together with them to set spending limits and discussing financial decisions helps develop a sense of responsibility and an understanding of consequences.
Building financial foundations for our children helps ensure their future success. by teaching them the value of saving, budgeting and understanding the difference of wants and needs, we set them on a path towards a brighter financial future. Not only does this prepare them for emergencies by emphasizing the importance of building an emergency fund, but it also cultivates responsible spending habits and a sense of accountability. By prioritizing financial education, we empower our children to navigate their financial futures with confidence and resilience, ensuring they are well-equipped to achieve their goals.
Rachel Caballero is community and public relations manager at TruWest Credit Union.
