As parents, we teach our children many valuable life skills. We teach them how to do well academically and socially. We teach them how to complete necessary daily tasks. We even teach them how the world works. We teach them these skills in hopes of raising them to be successful, contributing adults in the world. Yet, many parents fail to prepare their children financially. They do not provide them with the necessary financial skills and tips that they need for a financially secure future. It is important to instill these financial values and skills into our children?s minds, as soon as possible.
To understand the value of money
Some children grow up never understanding the true value of money. They want something, they get it. They will expect the same financial pattern when they get older. They may be angry or frustrated when they find out that the world simply does not work that way. You, as a parent, may also not always have the ability to provide them with whatever they want at the moment. Instead, teach your children the true value of money. Have them complete chores or household tasks in return for money for the things they want.
To understand the importance of savings
Children often do not have access to accounts and may never learn the importance of an emergency savings account. They may never understand wealth management, instead spending money as soon as they receive it. Wealth management is important in preparing for a time when you are less wealthy. Teach them to put away a small portion of their income, every month, for emergency and long term savings plans. Children savings accounts can be a great way to achieve this knowledge.
To understand the retirement process
Young adults do not entirely understand the retirement process, even though they are working full time jobs. It is important that your child begins saving for their retirement, even in their early 20?s. Investing money now into a retirement account can drastically increase the amount of financial opportunities they have when retirement age comes. Currently, one in five people who are near retirement age have zero money saved. Many of these people were never notified of the importance of saving for retirement early on, and by the time they realized that retirement was close, it was too late. A financial planner can be a great resource for wealth management and recommending retirement investment accounts.
To understand work sponsored savings accounts
Many full time careers offer work sponsored savings accounts. Some of these employers will even match contributions, up to a certain percentage. Yet, many employees do not take advantage of this, because they are not entirely sure what it all means. Informing your child of wealth management opportunities and work savings accounts can help them to make better decisions. According to the most recent statistics provided by the U.S. Department of Labor, there are 638,390 defined contribution retirement plans in the U.S. Provide your child with the necessary skills to choose the best one for their specific financial situation.
To understand they may not be experts in financial planning
Teaching your child about proper wealth management and financial planning is not with the intent of making them experts in the field. However, when you provide them with the knowledge that it is important to prepare, they are better able to ask the appropriate questions and to hire the best wealth management for their financial needs. Financial growth and security is best achieved when the person is aware of their individual needs.
Children are taught all types of lessons from their parents, yet one of these lessons is hardly ever finances. A secure financial future is important to their success. In a recent survey, about 41% of people ages 18 to 29 said they never thought about retirement planning! Avoid these financial mistakes and provide your child with the knowledge and insight they need to always be aware of and properly prepare for their financial situation.