Teaching your children good financial skills and making sure they understand the importance of products such as life insurance will ensure that they’ll be ready for the financial challenges of adulthood.
In a rapidly changing world, teaching your children about managing money has never been more important, especially given just how crucial strong financial skills are to navigating life and building wealth.
From discussing the importance of life insurance companies to showing them how to create and stick to a budget, taking advantage of everyday teachable money moments is important. It will ensure your children:
- Understand the value of money
- Develop good money habits for life
- Have the skills and knowledge to deal with the financial challenges of adulthood
- Are more likely to gain financial autonomy in adulthood
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How to Teach Your Child About Finances: A Comprehensive Age Guide
Saving money is one of the most important aspects of building wealth and having a secure financial foundation, yet many of us learned the importance of saving money through trial and error.
Luckily, there are ways to empower the next generation, and that begins by teaching children the importance of finances and saving from a young age.
Here is a step-by-step age guide on how to start teaching your children about money:
Ages 2-4
- Introduce your child to coins and help him/her sort the coins by like kind. Begin explaining the concept of equivalency.
- Give your child a piggy bank, preferably a clear one, so he/she can see their money accumulating.
- Play the customer-shopkeeper game with your child using change from his/her jar and your own wallet. Take turns with the roles so your child gains a better understanding.
Ages 5-7
As your child approaches school age, you should let them handle money on a regular basis so that they can become more comfortable with the case. Depending on your budget, you can even start providing them with a small allowance.
- Establish a set allowance amount and make sure that it is consistent.
- Determine whether your child will have to earn it (eg. do they have to do some chores in exchange for the money or will household duties be kept separate?)
- Set expectations for what your child is allowed to pay for from that allowance (eg. snacks, school lunch, or outings)
- Be very consistent with rules and make sure to pay them their allowance on the same day each week.
- Let your child learn from their mistakes. If your child decides to spend their allowance all in one day, then you should refrain from bailing them out as this will teach them how to be more responsible.
- Never use the allowance as a method of punishment or reward, but rather as a tool to help teach your kids about money management.
Ages 8-10
As your child gets older, they’ll no doubt become more interested in where money comes from and where it goes. At this time, you may want to:
- Explain how you earn money and discuss how your child might generate his or her own.
- Go over your family’s major expenses, such as mortgage payments, food, and utility bills, and explain how much they cost.
- Teach your children the meaning of income and expenses and talk them through the difference between needs and wants.
Ages 11-13
At this age, children often face intense peer pressure to keep up with the latest fashion and technology, so this is a crucial moment for you to be a strong role model and demonstrate to your child how to make smart spending decisions.
You can do this by:
- Sharing past spending mistakes and what you learned from them.
- Increasing your child’s allowance and helping them develop a budget/spending plan
- Introducing the concept of long-term saving and investing.
Teenagers
High school is a great time for your teenager to put into practice what you have taught them over the years. At this moment in time, you should:
- Take your teen to the bank so that they can open up a checking and savings account in his/her name. Tip: You can add a prepaid credit card to help your teenager establish good credit history and practices while they’re still under your roof.
- Encourage your teen to get a job, so they can start managing their own income and start saving for things such as a car or college education.
- Encourage your child to continue their financial education through field trips, online resources, and classes.
College Years
Before your teen goes off to college or moves out on their own, you should make sure to help them:
- Review their potential living, tuition, and other costs.
- Set and understand their financial responsibilities.
- Set up financial accounts in their new city.
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To find out more about how our mortgage life insurance products can help keep your family financially secure, even through life’s most difficult moments, contact us today at 1-844-974-2020 or fill in our online contact form.
