I was fortunate that I had a natural interest in math and money. So I was able to teach myself many of the fundamentals on how money works at an early age.
But as parents, it’s not so difficult to teach kids early about the basics of money. Take the time and it will payoff big time, figuratively and literally. It sounds boring, but it’s really easy to incorporate into your daily activities. After all, almost everything we do involves money, like it or not.
Start with your home. Let them know that in order to keep a roof over your family’s head, you need to pay a mortgage. It’s an opportunity to discuss with your kids about why home ownership really matters. You don’t have to get too detailed, but let your kids understand why you have to work so hard and why it pays off.
Take them grocery shopping and show them how to stick to a budget. Budgeting is so important and it leads to a discussion on how any money leftover can be used for investments. “Want to learn how to make money grow?” is a good question to start a discussion. Give them an allowance and teach them how to manage it. You can let them earn interest at the bank of mom and dad if you’d like.
When you buy things with a credit card at a store, simply explain to your kids how credit cards work. These days, so many college kids get into credit card debt when they sign up for easy credit. Explain to them that paying off your bill on schedule is the key to building your personal credit, which you can explain is all about building trust with lenders. They can understand why trust is important and that can carry over to other family matters, such as why they can earn freedom to go out on their own without supervision.
There are many formal programs in schools to teach financial literacy. I believe that if we simply take time to explain the basics to our kids in a natural way, their understanding of how money works will naturally grow.