We are living through a time of uncertainty. Millions of Americans have lost their jobs, and millions more experienced cuts to their income. Those who still have their jobs fear what the economy will bring over the next few years. If COVID has taught us anything, it’s the importance of being financially secure and protected. As parents, the best way we can protect and prepare our kids for adulthood is to teach them the basics of finance so they can build a strong foundation as they get older. Here are just a few of the positives that come with financial education:
Promote good savings habits
Saving early and often is the best way to ensure long term financial health. Just imagine if your child came out of college and started immediately saving for their future.
Budgeting teaches awareness and responsibility
If people have budgets that they actively manage, it forces them to look at their spending. They are aware of how much they have available, and this leads to making better spending decisions.
Smart financial decisions positively affect one's credit score
Kids and even young adults don't understand the concept of credit scores. They don't realize that their credit will affect their daily lives: getting a job, applying for a credit card, renting an apartment, buying a home or car, getting insurance or even signing up for their power bill. Having an excellent credit score could save them thousands and thousands of dollars in interest payments over their lifetime.
What's good for them is good for the parent's
Isn't this the truth in every way? As of 2016, 15% of 25-to 35-year-olds were living in their parents' home. This is an increase from the previous generation. Moving back home for a short break is not always a bad thing; it can allow young adults to recalibrate and get organized. However often, the reason the "children" move back home with their parents is for financial support. So the more educated your children are about finance, the less likely they are to need money and the less money you, as a parent, will need to spend. Win, win, win.
Teaches giving back.
Incorporating the importance of charity at a young age coupled with better banking and financial management skills provides people with more money and a desire to give back. This benefits not only the community but their children as well; charitable giving promotes confidence and compassion.
If your children understand how to budget, they will be more likely to live within their means and not go into debt. This means they avoid the suffocating stress that comes with it.
Positive communication skills
Because you communicated with your children about finance, they will learn lessons in positive communication around finance. This will be incredibly valuable as they get older, especially with their spouses.
Financially healthy attitude
If your children learn how to be financially healthy, they are more likely to develop positive attitudes around money and wealth. People's attitudes around money can be instrumental in shaping their characters.
By prioritizing financial education for you and your children, you can help them take control of their financial future - even in times of uncertainty.