Teaching your children about finance and money can help to raise their financial IQ and prepare them for adulthood. Some parents are reluctant to discuss financial topics with their children because they fear that their kids won’t be interested, or aren’t ready for it yet.
However, the smarter that children are when it comes to money, the more likely they will be to make intelligent financial decisions later in life. For this reason, HCR Wealth Advisors, a registered investment advisory firm servicing high net worth individuals, recommends starting financial training early. Here are some tips from HCR Wealth Advisors for how to educate your children about finance and money.
- Give them an allowance for doing chores
One of the most important lessons that children need to learn about money is that it doesn’t come for free. By rewarding your children with an allowance for doing household chores such as feeding the dog or taking out the trash, this will help to reinforce the concept that money is earned, not simply given. If your child wants more spending money, then you can offer him or her more chores to do, and raise the allowance if he or she does the extra chores.
- Teach them to make a budget
Once they have an income though an allowance, you can show your children how to make a budget. You can do this by having them make a list of their income and their expenses on a single piece of paper. The income list should be placed on the left side of the paper and the expenses should be placed on the right side. By doing this, your child will be able to gain a much better understanding of how budgeting works. This will help him or her to see whether or not he or she can afford things he or she may want to buy, such as a new pair of sneakers.
Budgeting is a crucial skill to know. Effective budgeting benefits everyone who does it, from a small child budgeting allowance, all the way to a large advisory firm, such as HCR Wealth Advisors, doing budgeting for a high net worth individual.
- Open a savings account with your child
Opening a savings account with your child is a great way to teach him or her how to deposit earnings for safe keeping at a bank. Knowing how to set up a bank account and to use debit cards is something that your children will need to know how to do. So, if you help them set up an account during their childhood, then it will help them to get used to the process. It is important for your children to know that cash and checks should not be left in places where they can be lost or stolen. Instead, they should be deposited at a bank. If your children get used to making deposits and using debit cards then it will help them to be more financially responsible.
- Teach them the basics of investing
Investing knowledge is something that can be extremely useful for your children when they reach adulthood. This is because if your children know how to invest in stocks, bonds, futures, etc., then it can help them to grow their net worth and to make more money than they otherwise would. There are several ways that you can help to get your children interested in investing and to teach them about it. First, you can buy them one share of a stock of their choosing, as long as it is reasonably priced. Then they can watch the performance of this stock. You can then help to explain to them why it is going up or down and give them news articles or other information about the company which can help to explain stock performance.
Also, you can set up an account for your children on a stock market simulator, so your children can use fake money to invest in securities and learn from practice over time. Stock market simulators are one of the single best ways to get your children to learn about investing. A good book on investing can also be helpful.
HCR Wealth Advisors believes that a good financial education is one of the most important gifts you can give your children. That is why HCR Wealth Advisors encourages parents to start educating their children about money from a young age. It is also why HCR Wealth Advisors takes the time to educate its clients on investment strategy and creates personalized plans to help clients reach their financial goals.
The firm also prioritizes protecting clients from risk and establishing great relationships through excellent service. So, if you are a parent, you should strongly consider providing your children with a financial education. If you are someone who is looking for financial advising, you should strongly consider contacting HCR Wealth Advisors today.
HCR Wealth Advisors is not affiliated with this website.