Categories: Budgeting
Raising kids is hard. Having conversations about money is hard. And teaching financial independence? That’s no easy task, either! But we all want our children to be bold and financially independent in the future. That’s why it’s important to talk about money openly and teach them critical skills and concepts that will give them a strong foundation for their financial future.
Six tips for getting your kids to financial independence:
1. Let them make mistakes
It’s so hard to watch your children make mistakes, but it’s an essential part of the learning process. You can tell them all you like that they shouldn’t buy a cheap item that won’t last, but that might be a lesson they need to learn firsthand. Maybe they’ll order a product on Amazon that they’ll find was terrible quality because they didn’t read the reviews. Maybe they’ll buy an online course from their favorite influencer only to realize it had no substance. Either way, those lessons learned through experience are bound to stick with them for years to come.
2. Talk to them about debt
There are all kinds of debt we may end up with over the course of our lives, some of it good and some of it bad. Most teenagers don’t know the difference unless you’ve sat down and had an upfront conversation about it. Good debt can include things like mortgages (you’re building equity), student loans (an investment in your future), and car loans (necessary for everyday life). Bad debt can include things like high interest credit card debt and payday loans with absurd interest rates. If you don’t explain these pitfalls, your child might one day incur bad loan debt without realizing what a huge, negative impact it could have on their finances long-term.
3. Teach them how to balance their checking account
Keeping track of finances is a lifelong skill that can be taught as soon as your child or teenager has their first checking account. Show them how to note their income and expenditures as they happen, and then how to use online tools or even an actual checkbook to reconcile those finances at the end of each month.
4. Embrace entrepreneurship
These days it seems like everyone has a “side hustle” or small business they’re running in addition to a day job. A traditional 9-5 may not be a good fit for some kids, or it may not bring in enough income to support the lifestyle they want. Teach your children about entrepreneurship and show them that it could be a viable path that’s well worth pursuing.
5. Don’t be afraid of investing
In fact, teach your kids about it. If you’re not as familiar or comfortable with investing, set aside a weekend to learn about it together with your teenager. With a little bit of research and planning, you can set them up with their very own Roth IRA or other investment vehicles in no time.
6. Set financial goals
Sometimes learning about finances can seem boring. Show them the real-world relevance with some real life lessons and follow up by setting goals. Together, brainstorm where they want to be five years from now. How about ten years from now? Twenty? What financial milestones do they need to hit to achieve those life goals? Talking about it and laying the groundwork of some basic plans is the first step towards achieving those goals.
Start Them Off with an Account from Summit
If your child gets an allowance, is already making money from a first job or just gets some regular “walking around” money from Grandma, it’s a good idea to sign them up for a checking account so they can access that money and learn about financial budgeting.
Sign up for an online checking account – a new way to bank!