It's Never Too Young: 4 Ways To Teach Your Child About Financial Planning

Posted on: 10 March 2016

When is the best time to learn about financial planning? You might think it's when you're an adult and you have retirement to plan for. However, that may actually be too late. By the time you're an adult, you've already developed habits that may interfere with your ability to properly plan for the future. For instance, you may not know how to work within a budget. Or, you may find it difficult to sock money away in a savings account. The best time to learn about financial planning is when you're a child. So, if you have children, the time to start teaching them is now. Here are four simple steps you can take to teach your children about financial planning.

Give Your Child Jobs That Pay

Chores are a great way to teach your kids about finances, especially if you pay them a wage for their work. After all, when they're adults, they'll be paid for the work they do. Assign your children chores and wages. Be sure to pay them on a regular basis, such as Friday afternoons. This will teach your children that an honest day's work earns them a financial reward.

Penalize Inappropriate Behavior

If you have a substandard performance at work, you're probably going to find yourself penalized for inappropriate behavior. You may be fired from your job or be required to take a cut in pay. If your child is old enough to understand that poor behavior requires a penalty, consider penalizing inappropriate behavior.

For instance, if your child fails to complete their chores for a certain number of days, or they only do a portion of the required work, sit them down and explain why they will be having a cut in their allowance until they're able to complete the tasks properly. This will teach your children the importance of doing a job right.

Open a Bank Account in Their Name

Bank accounts are an excellent way to teach children about financial planning. Take your kids to the bank and open an account for each of them. Be sure it's in their name so that they can experience ownership of something. Have them deposit 10% of their earnings in their savings account each month. At the end of the year, show your children how much they've earned by saving a portion of their pay each week. Savings accounts help your children learn financial habits that will follow them into adulthood.

Have Your Child Choose a Stock and Watch It

The stock market runs the financial world. While your child is still in elementary school, teach them how to follow the stock market. Sit down with your child and help them choose a stock that they would like to follow. Help them choose one that they recognize, such as a toy company. For a few minutes each day, study that stocks market activities. Your child will learn about market fluctuations just by following their favorite stock.

If you have children, now is the time to start teaching them about finances. Use the tips provided here to help your child develop good financial habits while they're young. For more financial planning tips, consider contacting companies like Global Wealth Consultants LLC.