Financial education is a very crucial topic that should be taught to young people from a very young age. Some parents think that their kids are too young to handle such matters. However, this is a not entirely correct, and it could do more harm to the kids than good. This is because, at their formative stage, kids develop habits that usually stick with them through their teen and adult years. Without imparting financial literacy to them at a young age reduces their alertness when dealing with money. HCR Wealth Advisors gives very crucial tips about how to handle this essential topic with your kids.
Some of the steps that they highlight include the following:
- Earning, rather than giving allowances.
HCR Wealth Advisors is a financial advisory firm. They believe that children should be taught that money should be earned rather than being given freely. They advise that it would be beneficial during upbringing to reward kids after they perform a chore. This will create a mentality of hard work as the best avenue of gaining money. With the hard-earned money, kids can learn the value of money and are less likely to spend it on impulsive buying.
- Teach them about budgeting.
Budgeting is a crucial skill that helps many people manage their money. When this skill is developed at a young age, there is a high likelihood of it sticking for the rest of the individual’s life. Kids have earnings from savings and other sources. You should teach them the essence of budgeting before spending. The best way to do it is by creating a chart or table that highlights the priority thing that they intend to buy on the right and the money available on the left. From there, you should help the kid to decide what is essential at the moment.
- Nurture a savings culture.
Saving is one of the most difficult things to do even for individuals who earn large amounts of money. It is, therefore imperative to cultivate a savings culture for your kids as early as possible. In a Nasdaq.com article, HCR Wealth Advisors says that you can open a bank savings account and guide them through saving. The earlier this habit is developed, the better for your kids as it discourages them from erroneous spending without thinking about the future.
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