It’s a big surprise and we are not taught in schools about what is financial planning and personal financial management. At this present scenario, parents should take steps to teach their children regarding financial management. Beth Kobliner is the famous author of New York Best Seller “Get a financial life” and creator of “Money as you grow” and he is also a crew member of the president’s advisory council on financial capability. His publications include age appropriating lessons which are very useful for the younger children. He underline that our younger generation is at higher risk and they are not aware of personal financial management. According to the mortgage crisis, he gives accurate rates of $1.1 trillion student debt, 3.9 millions of foreclosures and $845 billion credit card debt. He ends up saying adults need more lessons and to be taught younger children to avoid forthcoming risks to the next generation.
“Parents are Influencers” says Kobliner:
It’s the prime duty of parents to be influenced in a proper way that impacts the financial behaviours of their children. According to the report generated by the researchers of the University of Cambridge commissioned by the UK’s Money Advice Service, money habits among children starts only at the age of 7. Kobliner advises parents to take the advantage of teaching day to day classes to their children about what is financial planning and says, “parents should start by giving $2 a 6 year old kid and can ask him to buy fruits”. Simple lessons can bring better creditors, consumers and investors.
“Good Money Habits at an early age sets up a Happy Life with Financial Freedom” says Lazetta Braxton, Founder and CEO of Financial Fountains. Saving, sharing and spending are three important lessons to be taught at an early stage. She says that parents should encourage kids in saving for their long term goals and kids should taste fruitful benefits of saving and spending for their own needs.
Teaching financial lessons is very tough at any time but it’s very useful, if it’s done at the right age. Parents should take initiatives at earlier age of their kids cannot be waste and it’s your duty to enlighten their future by prime lessons. Common lessons in Personal Financial Management:
- Save money before you go for spending
- Spend from your savings and don’t borrow unnecessarily
- Insurance is must for any investment
- Invest wisely and opt long term investment
- Use your investments properly
- Have needful assets
- Have specific goals
- Save for old age
Learn from your mistakes!
- It’s better to something in your personal managements instead of nothing. It’s wise if you have your personal financial decisions without further thinking. Lessons from your mistakes are always helpful
- Don’t hesitate to learn anytime from your own mistakes
- Aware of your financial limitations
- Make corrections anytime when you need in your financial management
- There is no need to sit quietly, if mistakes are happening at times and it will bring you better guidelines and don’t waste it for any cause
- Give your kids a jar or piggy bank and give them small money every day. Saving day by day can help them knowing that they are growing financially and ask them to spend from their own
- Be Influencers: Most of your activities are noticed by your kids and they notice everything that you do and it’s in our hands to do right and set a best example in their life
Lessons at elementary level students:
- Make them better decision makers: When your kids aspire two things at the same time, give them an opportunity to choose which one they want in prior. Giving them a chance to make decision is wise and by the way they will understand the cost of things that they possess and the money value that they spend for everything
- Help kids to earn: It’s better if you don’t encourage your kids by giving allowances. Ask them to do chores and earn money out of their jobs.
Smart Money Smart Kids is a book deals more about earning at the early stage, Dave Ramsey is an author of that book and he shares his own experience with his daughter Rachel Cruze.
- Give your kids money making and spending decisions: if they want to possess any costly thing they should plan using their own money and sometimes it’s hard for them to believe that they have to wait to buy anym costliest thing, if they wish. By this way they will learn, how to spend their hardly earned money.
- Teach the significance of giving: Giving will never ever affect credibility and teaching kids to give a little to any charity or church or needy people. Teaching them value out of giving is the fine most thing at childhood period
Lessons for Teenagers:
- Teenagers are easily impacted by their friends and colleagues and their recent activities. Since everything is openly visible in social media, teenagers start comparing their lifestyle with others and there they crave about luxury lifestyle. But it’s the prime duty of parents to teach them about contentment and spending for the one wisely. Real happiness is always in enjoying ourselves with what we have
- Right time to open a bank account: Teenagers can start opening a simple bank account and by this way they can prepare themselves on personal financial management and it helps them in future financial planning
- Save for your college: it’s a wise thing and you have to encourage your children to earn for their college fees or any additional programmes that they want to possess. They can go for jobs in summer holidays by doing so, they will feel satisfaction and gives independence in planning finance
- Educate your children about risks in student loans: there are several options that every student should be aware before they opt a loan for their college education. It’s to be taught even when they are studying at schools that they can work part time to save money for college admission and going to the community college or instate university or availing scholarships are further options that any one can have. It’s better if parents have discussion with their children before the college admission process
- Educate about problems faced by the credit card holders: Nowadays students are highly targeted by the financial institutions to make them credit card victims as soon as they begin 18. If you aren’t taught them at the right time, they will be the one amongst.
- Budgeting is a fair idea: Start teaching them by simple budgets and by this you can bring them into a habit of making proper budgets with their small income will be highly useful for their future.
- Lessons about Compound interest: Ask your children whether they want to become better investment savvy and give them ideas on making compound interest and give them better quotes and examples
- Ways to make money at free time: Encouraging younger ones is must and it’s the biggest turning point in anyone’s life and in such a way they can understand that they have plenty free time and breaks to earn money out of own business or part time jobs.
It’s a hard truth and still our children are at greater risks of financial crisis. If every parent understands about this present scenario, we don’t need to be panic about future. Financial education is must even at schools to children but parents have prime responsibilities in this session.
Personal Financial Management is must and to be taught even before they grown up. It’s the important thing and giving children knowledge on Credit cards, Compound interests, Cheque book, Basic budgets, Credit building techniques, Investments, Stock market basics and Small business opportunities can make them become a leading people in financial futures.