When kids become teenagers they are more and more acutely aware of family finances and how money is spent. When the needs of your kids become more expensive it may be time to teach them about how personal finances work in a modern society. Some schools offer business classes only as an elective and aren’t required so financial lessons may have to be learned at home.
Since each family’s situation is different perhaps personal finance should be taught at home anyway. Here are some relevant tips and ideas to get your kids thinking about how the modern world of personal finance works.
Make sure your child knows the difference between terms such as debit, credit, balance, withdrawal, deposit and other important words. Other terms such as mortgage, principal, interest and loans are also words your children should understand.
Scholastic is a good place to start for kids ages seven to 12 for basic definitions of financial terms. The beauty about teaching your children at home is you can expound upon whatever you want, how you want. If you think your children can handle a lesson on stocks and bonds then go for it!
As your child turns 13, many financial institutions will allow your child to have a debit card in their own name. There is no better way to teach financial responsibility then to give your children a debit card. The wonderful thing about a debit card is your kids will have their own balance, their own name, a separate pin number and everything a regular debit card has.
The only difference for your children’s cards is ultimately the parents are in control of adding money to the card and is routed through a parent’s verified account. Visa has a nice program that teaches younger kids about financial responsibility and has a kid’s reloadable debit card for those 13 and older.
Make the financial lesson personalized to your kids’ own situation. Be up front with them about it–tell them how much each parent makes, how much is taken out in taxes and what the monthly expenses are. Go through financial documents such as the mortgage or lease, car loan, credit card bills and other regular monthly statements. Showing your kids how a bank statement works is also a good primer for financial lessons.
Then you can theorize with your kids about a job they may have in the future. If your son wants to save for a used car worth $5,000 you can take him through the steps he needs to do in order to buy it. He can either earn the entire amount or get enough for a down payment on a loan. When your kids realize they can be financially dependable it makes their own finances easier in the future. Teaching good financial skills also puts them on the path to a good experience with banking and a better credit score.