Knowing when and how to start teaching kids about money and identifying the money skills they need can be difficult, but experts say it’s critical to their future. To tell.
Knowing how and when to start teaching kids about money and identifying the skills needed can be difficult.
Parents often want their children to be worry-free and carefree, but financial confidence and literacy are key to ensuring a happy and comfortable future for their children. Ultimately, experts say it’s important to boost your child’s financial confidence.
Susan Hirschman, director of wealth management at Schwab Wealth Advisory, told CNBC Makeit, “Money skills influence important milestones like getting married, getting a job, and buying a home. , it is imperative to have appropriate financial responsibility.”
For example, employers may conduct credit checks to screen employees, and even large purchases like a home can be affected by financial history, she explains. . By establishing good habits early on, you can avoid problems, Hirschman says.
Seth Wonder, chief investment officer at Acorns, said other dangers that children without financial education could fall victim to include potential debt burdens such as “buy now, pay later.” It is said that there are traps.
Eric Landolt, Family Advisor and Head of Art & Collecting at UBS Global Wealth Management, went one step further.
“Financial literacy should be a basic skill, a basic skill in the sense of reading, writing, doing something, which should be imparted to everyone in any situation,” he said. He added that money decisions can have far-reaching implications for society, depending on how money is spent and invested.
It’s clear how important conversations about money really are. But when is the right time to start taking them? Opinions vary among experts, but it may be much sooner than you think.
Six-year-olds are the age when children begin to understand some money concepts, Wonder said.
“This is the age when children start to understand math in school, understand the consequences of ‘it’s gone, it’s gone,’ and are able to set aside money for things they really want,” he said. Told.
By the time children turn 7, many of their financial habits are already formed, he added, adding that children become aware of and interested in money much sooner than many parents expect. pointed out that it would be
Hirschman suggests starting even earlier, between 3:00 and 5:00. “This is a time when children develop the ability to make choices and reason,” she said, ideally starting with the easy ones and progressing to inheriting their own financial values. she added.
Landolt is somewhere in between, and said children are most receptive to the messages about family values passed on to them by their parents and grandparents, so a good time to start is as early as age five. He recommends teaching 5- to 8-year-olds “very basic things” such as the value of money and how choices with money affect them. there is
Landolt believes the topic can be more complex for children ages 8 to 12. “We can talk about different types and uses of money, so savings and spending, some of those concepts, construction and investment, etc.”
Landolt explained that as children become teenagers, ages 12 to 15, they are given more responsibilities, such as managing a small budget. This includes concepts such as spending, saving, and understanding how decisions to spend money affect the money left behind, but it also includes more detail, he said. . It’s also a good time to start discussing family-wide financial decisions, such as supporting charities and charitable causes, and asking children’s opinions about them, says Landolt.
Finally, 16- to 18-year-olds are likely to learn about how the financial system and banks work, a topic that Landolt said will be a popular topic in schools.
When you decide to start a conversation about money with your kids, there are a few things experts recommend keeping in mind.
Hirschman believes three of the most important things to remember are to be consistent, focus on action, and have an ongoing conversation.
“If you let children make small mistakes that you can teach them, they can learn from them,” she says.
One way to do that, she points out, is to give them an allowance. Wonder agreed with the proposal, explaining that she could teach her children how to budget, spend and save responsibly.
It is also important to try to have conversations that are age-appropriate.
“How a 6-year-old will approach this issue will be different than a teenager, but there is a common theme of teaching children the difference between needs and lacks,” Wonder explained.
Finally, Hirschman believes that parental example, like many other things, can have a profound impact. “It’s important to do what your parents preach and not give mixed messages,” she says.