I recently read an article that shared statistics about how the COVID-19 pandemic is resulting in families spending far more time together, than ever before. Families are feeling closer and more bonded than ever. They're more involved in each other's work and school lives. They're eating more meals together and they're playing games and puzzles together. I know this is happening in my house, and yes my six year old consistently beats me at UNO. That brings up an interesting topic, I love to talk to my clients about, how to better educate your children about money and improve their financial literacy.
As parents, we rely on the schools to teach our children a lot of the life basics, such as history, reading, writing, and math. Most schools are dealing with a new world because of the coronavirus. And it might not be the best time to outsource important lessons about money management. Let's be honest, a lot of us were ill prepared for the financial responsibilities we had when we were young adults, and these mistakes can be costly. That's why it's important to start educating kids about money early, and often, and at home. It's really much easier than most people realize, to utilize this extra family time to teach kids about finances. Here are a few tips we have used over the years. First, it's important to make learning about money part of your kids' everyday lives. Infuse lessons into grocery store visits, board games, card games, birthdays, holidays, and other events and activities that you're already doing with your children.
Talk to them about needs versus wants, saving versus spending, current needs versus future needs, and more. And use real life examples and actual dollar amounts when talking with them. Second, start a savings and investing plan with them as soon as they're old enough to understand the concepts. If they're toddlers, or elementary aged kids, perhaps start to plan with a fun activity. A piggy bank painting party, you can excite them about saving money in the new piggy bank they just painted. They're more likely to want to save, and thereby learn the benefits of savings. For teenagers, when they want to pull money out of their savings account to buy the popular new video game, discuss the balance between saving and spendings. Considering a matching program in which you encourage your children to save for things they want, in exchange for matching contributions to their savings.
Finally, talk to them about concepts of interest and compounding. How to get your money to work for you. Although these ideas are abstract, it often helps people to save when they understand that choice isn't really spend versus save. It is spend less now, so you can spend more later. I hope these tips are helpful and encourage you to start improving your child's financial literacy. I'd love to share more ideas, specific to your situation and your children. Our office remains closed for now, and our staff is rotating, but we're still available to talk with you via a phone appointment, or video conference. If you have concerns, or just want to stay connected in these challenging times, please feel free to schedule a time to talk with us at your convenience. As always stay healthy, stay safe and stay happy.