Been thinking on this for a while. I have 2 kids in elementary school. Something I have been podering is that fact that many people have poor financial literacy when it comes to finances and credit and credit scores.
So let me ask the parents out there:
How do you teach your children about financial responisbility?
I am trying to do the basics like savings and the like, but it is a struggle because young kids are all about those latest toys they want to throw their money at.
So what do you suggest for other parents out there pondering how to present this information to the young?
That is a nice idea. It certainly gives her the chance to understand savings and buying power. Any ideas on how to discuss credit?
There are just three basic money principles: 1) spend less than you earn, 2) put aside for retirement from day one, 3) don’t be late, ever. Any talk of specifics on bank accounts, credit cards, mortgage loan, utility bills etc won’t matter much, unless you first fully grasp these three principles.
Because your kids will inherit your financial habits to some extent by way of parenting, it’s important that your actions reflect your words. And as it often goes, money problems are a symptom of underlying issues, which is why basic money principles are really lifestyle principles.
Maybe it's me but you don't have to spend the money you earn immediately. It's okay to get a toy here and there but I do think it's important to save. Personally, I would give my children an allowance each week but teach them to save 50-75% of that money in a 529 or something along those lines BEFORE they receive whatever is left. I would tell them that they are saving that money for the future. They need to understand the power of exponential growth because if they save now, they can watch that money grow immensely by age 18 when they're heading off to college or to start life.