7 Reasons to Teach Young People About Finance – Today

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Are you considering teaching your children about money, but aren’t sure how? Are you going to wait to teach your children about money until they’re older? Considering not teaching them at all, and letting them learn on their own? Here are 7 reasons to teach young people about finance – today.

1. Financial awareness starts at an early age. Having to “un-learn” bad habits takes longer than learning good ones. Giving an allowance from a young age (even infanthood, and putting it into a savings account) rather than handing out money for specific activities allows a child to learn to save their money, rather than spend it as soon as they get it.

2. Young people given financial responsibility will often begin saving for their own education at a much younger age, reducing their reliance on student loans and/or their parents. This isn’t to say that a 6 year old will open an RESP any time soon, but middle school and high school children may start saving their allowance or working income for a post-secondary education. Anything a parent can do to increase a child’s future independence (from themselves and from credit) is definitely a good thing.

3. Teaching your children that they can make money by providing value rather than a set amount of money for a set amount of time will teach them to be entrepreneurial, increasing their possibility of future success. Instead of giving a certain amount per month or per chore, give your child marginally more money for the chores that they do that provide more value. For example, while dusting the tables and mowing the grass may take the same amount of time, unless you really like your lawn, you would probably get more value from your child cutting the grass. Give their allowance accordingly, and you’ll likely find your child doing more high-value chores voluntarily. You may also find their entrepreneurial mind blossoming at a younger age! Lemonade, anyone?

4. An increased interest in saving will mean a decreased reliance on credit in adulthood. As we all know from the credit crisis currently underway (and any news headline since 2008), reliance on credit is a bad thing. Show your kids how to save, and they might avoid the credit trap.

5. Greater awareness of the actual cost of items will increase the likelihood of achieving independence early as an adult. For many of the “boomerang kids”, they didn’t return home because they prefer the way mom washes their socks. Many adult children living with their parents are doing so because when they left home the first time, they thought they could “make it” with the income they had. When the learned the real cost of a home, vehicle, food, and bills, they couldn’t keep up and quickly went broke. Save your children from this fate. Help them discover the “costs of living” sooner, rather than later.

6. Financial knowledge will give children an increased confidence in their ability to make decisions on money matters, giving them more power in all aspects of life. You probably wonder what life would have been like if you had invested in Microsoft, or IBM, or Apple. Well now imagine your children have the ability to invest in a company like that – and they have the confidence to actually make the investment. Not only will increased financial knowledge help children with their finances, but it will help them with all other areas of their life as well.

7. The concept of saving money for a future purchase also teaches delayed gratification and self control, a quality that is valuable in many other areas of life. Saving money for a big purchase not only teaches children not to use credit as often, but also teaches them self control. Rather than getting a small payoff today, they’re willing to wait for the bigger payoff tomorrow. This principle will not only help with finances, but with education, physical fitness, and other areas.

If you’re waiting to teach your children about money, or you had decided not to teach them at all, maybe those 7 reasons will persuade you to start teaching early!

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