July is recognized as National Make a Difference to Children Month. A time for celebrating commitment to our children and the efforts that help empower them for a better future. As we commemorate this significant occasion, it’s an opportune time to reflect on an essential but often overlooked aspect of child education: financial literacy. It’s never too early to teach children about money and financial responsibility, which can create lifelong positive impacts.
Practical Methods for Teaching Children about Money
With many organizations dedicated to this cause, resources are readily available for parents and guardians. Here are five tips and methods you can incorporate into your daily routine to teach your children about money management:
- Encourage Open Discussions About Money: Open dialogues about money should be commonplace in your home. This means allowing your children to ask questions and offering truthful answers, even when difficult. Discuss your experiences with money, good and bad, to give them a broader perspective. This can include explaining your paycheck, showing them how you budget, or discussing the cost of their favorite activities. Understanding the significance of money in day-to-day life can help them appreciate its value.
- Understand Needs vs. Wants: Educating children about the difference between needs and wants is essential. A need might be something necessary like food or housing, while a want could be a new video game or toy. Demonstrate this concept practically by involving them in budget planning. Show them how you allocate money for needs first and then consider wants. It’s also crucial to explain the implications of overspending or not saving. By understanding this essential difference, they’ll be more equipped to make sound financial decisions.
- Implement a Chore Chart: A chore chart is an excellent tool to teach children about the correlation between work and income. Create a system where they earn a certain allowance for completing household tasks. This will help them understand that money is earned, not just given. Also, encourage them to save a portion of their allowance each week. Using the three jars method—one for spending, one for saving, and one for charitable contributions—can be a practical way to instill financial responsibility and the joy of giving.
- Establish a Savings Account: Opening a savings account for your children is another hands-on method to teach them about money management. Visit your local bank with them and involve them in the process. Explain the concept of interest and how their money can grow over time. Allow them to make deposits so they can understand how it feels to save money and watch their savings grow. This tangible experience will provide invaluable insight into how banking and personal finance operate.
- Lead by Example: Children learn more from what you do than what you say, so it’s crucial to model responsible money management. This involves timely bill payments, conscious spending, and consistent saving. Show them that you avoid impulse purchases, save for the future, and are mindful about not accumulating unnecessary debt. They’ll likely adopt similar habits by seeing you manage your money responsibly. Moreover, sharing your financial goals and the steps you’re taking to achieve them can inspire them to set their own.
In an ever-changing economic landscape, equipping our children with the knowledge and skills to manage money responsibly is not just beneficial—it’s essential. By teaching them these lessons now, we are investing in a future where they are less likely to struggle financially and more likely to make informed decisions about their money.
Join Us in Empowering the Next Generation
At Legacy Private Trust Company, we deeply value the importance of financial education, recognizing it as a crucial stepping stone to future prosperity and stability. It’s our privilege to build relationships with our esteemed clients and their children and grandchildren. We understand that legacy is not only about wealth but also about the wisdom to manage it. We take immense pride in playing a part in shaping the financial futures of the next generation. Through fostering these relationships, we aim to create a solid financial foundation that will help them preserve and grow their family’s legacy. This National Make a Difference to Children Month, and all year long, we pledge to continue this vital work of empowering young minds with the financial tools and knowledge they need to stride into their financial future confidently. Here’s to building legacies, shaping futures, and making a meaningful difference in the lives of the children we serve.
If you are a Legacy client and have questions, please do not hesitate to contact your Legacy advisor. If you are not a Legacy client and are interested in learning more about our approach to personalized wealth management, please contact us at 920.967.5020 or connect@lptrust.com.
