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Five Tips for Encouraging Financial Literacy in Your Children

Five Tips for Encouraging Financial Literacy in Your Children

April 06, 2022

It’s never too early to start teaching your children about financial literacy! You don’t have to explain all of the intricacies of the stock market, but you can start exploring how to make a budget, be frugal, and save money. With the help of the Cambridge Financial Group, you’ll be able to start preparing your family’s finances for the future. Plus, you can follow these tips to help your children become financially savvy!

Explain the Real Estate Market

Chances are, your own children won’t be buying homes until later in life - but it’s never too early to explain how the housing market works and why property ownership is one of the keys to financial security. Many young people don’t realize that buying a home allows them to grow their assets.

It’s important to teach your children about the realities of the housing market well before they are ready to buy a home. Illustrate how the housing market can actually benefit buyers or sellers at different times. Redfin, a real estate listing website and brokerage, states that when the economy is struggling, or the home inventory on the market is larger than average, it will be more difficult to sell your home, as the market will favor buyers instead.

Create Age-Appropriate Budgets

Your kids aren’t too young for budgeting! If they receive an allowance or occasional cash gifts for birthdays and holidays, you can start teaching them how to budget. For example, if your children are in elementary school, Freedom Sprout recommends focusing on creating a budget structured around savings. Show them how setting aside a certain percentage of their money for a bigger goal adds up over time.

Involve Your Kids in Shopping

If you’ve always taken your kids shopping with you, you can use this as an opportunity to talk to them about your purchases. For instance, you can go over your grocery list together before you leave the house. When you arrive at the store, show your children how much different items cost and add up the prices together as you go. They can start to get a sense of how much necessities cost and why looking for deals is worth the effort.

Say “No” When Necessary

It can be hard to tell your children “No” when they really want something. But these moments can actually be teaching opportunities. The next time your children ask for something expensive, it can be helpful to explain to them exactly why the item is out of your budget. Talk to them about your necessary expenses and how the item would stretch your finances. You can even encourage them to set their own savings goals for items that they want if they don’t fit into your budget.

Practice Frugal Habits

Finally, it’s important to set a good example for your children by practicing frugal habits in your household. This could include cooking at home more often rather than going out to eat or ordering takeout, mending clothes or shopping at thrift stores instead of buying new items, or tackling home repairs DIY-style when possible instead of immediately calling a contractor. Your child will begin to see just how many ways they can save money in their adult lives when the time comes. Furthermore, they will realize that the cost of convenience is often not worth the strain it can put on your budget.

Teaching your children about financial literacy does not have to be complicated. In fact, showing them how to manage money can be a lot of fun! With these tips, your kids will be well on their way to financial security in the years to come.

Ready to start planning for your family’s financial future? Cambridge Financial Group can guide you! Schedule an appointment through our website today.

 

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