by Jackson Wegner, CFP® – Advisor
The earlier in life that one creates and implements good habits, the more likely the habits are to last a lifetime. Just as a healthy diet, a strong work ethic, and good manners become habits, the same applies for establishing responsible financial behavior.
Our clients often ask us what financial literacy resources are most effective and useful to help teach their kids and teenagers financial lessons to be intentional with their money. We recommend introducing financial education to children at a younger age. Most parents want to teach their children the skills and habits required to earn money, save for something they want to buy in the future, how to invest money even if their own parents did not teach them the money skills needed in our modern world. As a parent you cannot control the money mistakes your kids will make, but you can teach them how to respond to the tough money lessons early on.
Encouraging your children to contribute to the household chores by earning an allowance is common practice for parents. A less common practice is offering to match your child’s savings if they agree to put money away for the future rather than a non-essential purchase. For example, if they agree to put away 50% of their allowance each week into savings instead of 25%, you could match their extra savings to exhibit the power of compounding.
This holiday season, I gave each child in my life $100 to shop for the “old people” people over age 18 according to them. I had them write down the names of everyone they wanted to buy gifts for, including pets, then divided $100 by that number to set a budget per gift. We went shopping, and they learned if their gift choices fit within their budget, making hard choices as needed. They enjoyed the process while learning about money. (Pro tip: bring your patience to the store—this trip is about them, not your to-do list.) We used cash for our shopping trip because kids often don’t have a mastery money yet since we live in a digital world of swiping credit cards and tapping our phones on the machine at checkout now.
You may be familiar with Greenlight, a popular mobile app that helps teach banking and investing lessons for teens. As technology takes center stage rather than the old-fashioned cash approach of going into a bank branch to open an account, apps like Zogo and Biz Kid$ present options for teaching kids about money at a younger age. We’ll leave it up to the parents to determine fun rewards for focusing on financial education!
At Moneta, we can work with your kids directly through our Family Learning Program and Center for Family Education, using an industry leading online financial education platform covering thousands of different financial topics. We also publish research and thought leadership on family wealth education to help guide and educate parents.
Our team assists with multi-generational wealth transfer through tailored financial planning. We specialize in inheritance planning and educating the next generation(s) about their wealth. We provide financial education tools and host family meetings between generation 1, 2 and 3 to empower you to navigate life’s path and protect what you cherish. Please contact our team for more information on starting your financial planning journey and legacy planning for the next generation.
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