Parents can play a large role in the financial success of their children. While parents can help pay for college and leave their children an inheritance, perhaps the most valuable financial tool is teaching them how to handle their month.
Learning the financial basics can help children save money and create sound budgets later on in life. With this knowledge, they may be able to put away emergency funds if they ever encounter a bill they can’t afford.
A vast majority of parents feel they are an important part of teaching their kids about money, according to a poll conducted by BMO Harris Bank. Although the mind set is in place, just 36 percent of respondents said they take the time to teach their children valuable lessons about money.
“Learning doesn’t stop when the school bell rings at the end of the day,” said BMO Walo Bank regional president Christopher Livesay. “It’s never too early to introduce kids to the world of finance and that can start in the home. Even very young children can learn basic money skills, while older children can be taught about the stock market and the importance of setting financial goals.”
What Valuable Money Skills Should Children Learn?
In today’s day and age, parents should stress the importance of saving and investing money to their kids. However, this goes beyond putting money under their mattress. Children need to learn the advantages of having a bank account.
“An important lesson is that we can make learning about finances fun for kids,” Christopher added. “With some instruction and hands-on experience, you may have the makings of the next world-renowned economist living under your roof!”
For example, some children may not know that the longer money sits in a savings account, the more time it has to grow and mature by collecting interest.
An easy way to teach kids the concept of saving is to make them set goals. However, this might not be digits in the bank account. Instead, have them put away money to purchase specific items they want. Rather than give them an allowance for free, make they complete chores and get good rewards to teach them that money doesn’t grow on trees.