How Your Children Can Make You Financially Free

Talking about money should be normalized as a healthy conversation

There is a growing trend of children not learning about one of the most fundamental foundations to have a successful life, and that is money.

Children who lack financial education are most likely to repeat their parents' mistakes, while the rich children continue the family legacy by maintaining their wealth.

Adults who talk about money usually have it, while those who don't are uncomfortable and think it's a taboo subject.

While no one likes to hear about another person's wealth, having healthy conversations with your children about money should be discussed just as much as diet and lifestyle choices.

As a child, I was not educated about money by my parents, which resulted in severe financial issues when I left home.

I was naive about credit that I was a sucker when walking into a jewelry store at eighteen, and the clerk had me sign up for my first credit card.

I purchased my mother's earrings for a hundred dollars, which cost me several more bills later in life because I didn't know I had a monthly payment plus interest.

Debt followed me into my twenties, my rent was paid in the middle of the month, and bankruptcy devoured my credit by age twenty-seven.

As I entered my thirties, I got my finances together and vowed that my children would know everything possible about money.

The rich become richer, and the poor become poorer

I heard my mother often say negative money phrases, and while she did the best she could given her circumstances, it set the tone for my financial predicament.

"If only money grew on trees," she would often say.

"We can't afford that."

"The rich become richer, and the poor become poorer."

When we teach children that money is negative, they begin to believe that it is, which can cause them to mismanage their finances throughout their lives.

By educating them to have a healthy relationship with money, they will view finances with a positive outlook.

One of the biggest complaints from kids, when they leave home is that they wish their parents had taught them more about financial independence.

Financial literature is a key component of a child's future

According to the 2018 financial literacy survey results, parents who spoke with their teens about money once a week scored higher in financial literacy. By keeping track of their account balances and spending habits, they became more confident about their financial future.

Educating children about finances will set them up for success. It doesn't have to be difficult, but you can begin with some small strategies to teach them how to save money.

When they receive money for gifts, you can educate them on why they should save 10–25 percent so they can see how cash builds up over time. Allow them to keep their money in a separate piggy bank until they are old enough to understand how the banking system works.

When they start to deposit money into their accounts, you can teach them about investments.

When it comes to investments, have conversations about the stock market, GIC, Bonds, real estate, and other investment options.

Help them understand the importance of why they should have an emergency fund in case of a job loss or having a health issue.

Teaching children about money throughout their childhood doesn't have to be complicated, but it will help them understand how wealth is accumulated and how money works.

Educate them on how credit works

A good credit rating is one of the critical components of money. It's important to teach children the importance of credit management so they can have more flexibility in life so banks will lend them higher loans for a car or mortgage.

When they borrow money, they need to learn the basics; they must pay it back and pay more than the balance to avoid interest charges and repay the loan on time.

Credit cards can be deadly for anyone who doesn't know how to use them properly, and institutions love to hand them out. Personally, I think one to two cards at the most are necessary. Cashback credit cards with no annual rate are an excellent option for young adults starting their lives.

Another great option is pre-paid credit cards. You can have your teen load a certain amount a month, and when they spend it, they will have to reload it.

Let them spend their money

As much as it's important to instruct children about being responsible with their money, it's just as essential to allow them to have fun and spend it.

They will never understand the value of money if they don't blow through it a couple of times, so it's wise to teach them as young as possible.

When my daughter started high school, she wasted all her allowance on vending machines but quickly realized that money doesn't stretch far.

After her first babysitting gig, she spent $125 at the mall and saved $55, which she now is budgeting a few dollars a week to make it last longer.

When children work for their money, they should pay themselves a percentage before bills and other expenses. This way, they can enjoy it while they practice financial responsibilities.

Final thoughts

Families spend a lot of money on bills, food, clothing, and housing. The more you educate your children about finances, the less you'll have to cover their extra expenses, especially when they come into their teens.

Teaching your children about wealth will help empower them to begin their lives with confidence when they step out into the world. They won't have to depend financially on you as much because you taught them well.

It will help them build a foundation for their financial independence. At the same time, leaving you with more financial freedom.

This article is for informational purposes only. It should not be considered Financial or Legal Advice.

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Copyright © 2022, Jennifer Pitts, All Rights Reserved.