April 17, 2024 Breaking News, Latest News, and Videos

4 Finance Lessons Every Parent Should Teach Their Kids

There are many lessons parents teach their kids while growing up. They start by helping their little ones learn how to walk. Then they ease them into talking and communicating with the people around them. Parents hardly ever try to introduce their children to one of the most important subjects of all: finances. 

Competency in money and finance is severely lacking for Americans. From finding the best term life insurance rates to figuring out the difference between a credit and a debit card, there are a variety of important things to learn.

We’ll talk about the items that will guide parents in their quest to talk about financial literacy. Kids can grow up with a better understanding of their financial situations, and they’ll be independent adults because of it. 

How to Use Coupons

You can start helping your kids learn about the value of money from a very young age. And no place on the planet offers more discounts and coupons than the supermarket. 

When your child wants something fun to eat, show them the price of the item they want. Talk about some of the recurring language that is used on the price tags. Buying two to get one free or purchasing one item and getting the next one for half off the original price are both simple, yet important things for kids to understand. 

Show how it’s important to look at the price of everything in the cart. Look for coupons before you go to the store for things you know are on the shopping list. Compare prices of one product to another brand selling the same. 

Lessons in the store should help with their basic understanding of math, too. You could even talk to your kid’s teacher about the things you can do that will simultaneously improve arithmetic skills and financial understanding.

You can also teach the value of getting extra savings via the type of shopping that directly relates to your children: back-to-school. From couponing to comparing prices, there are also smart lessons about savings to share this way.

Debit vs. Credit

The debit versus credit rundown is a little too advanced for young children. Teenagers are the ones you should have these conversations with. Adolescent children want to start making purchases with their own money, especially if they have a job after school.

You need to help them in this journey by introducing them to these different payment methods. Cash should be used for small purchases. This way you won’t wrack up huge totals on your cards. The benefit of cash is it comes in limited supply, and spend-happy teenagers need this protection. 

Parents can take out a credit card or a debit card in their children’s names to get them familiar with these forms of spending money. Credit needs to be understood, though. This card is essentially a loan from the bank you have to pay back later. 

A debit card takes the money directly from the person’s bank account. This is why credit cards are such an addictive payment method because you sometimes feel like you aren’t spending your own money. Teenagers need to be taught using a credit card for every purchase is a way to get into unnecessary debt. 

Most banks will require parents to connect their child’s account with their own. This makes the adult liable for any poor decisions their kids make. Talking about this will create more communication between parents and kids.

Introducing Entrepreneurship

Kids should get familiar with entrepreneurship from a young age in 2022. The world has become so ripe with business ownership opportunities, and kids can learn about them in simple ways. 

Boy Scout troops sell popcorn, Girl Scouts sell cookies, and anybody can sell lemonade. Putting kids in these situations will start to familiarize them with money and the value of different products that are sold. 

Some schools encourage kids to sell products for fundraisers to go to camps or to create a budget for another field trip. Many parents do the majority of the selling while their kids watch. 

Active learning is a better approach. Have children take the money after purchase, give change, and thank the customer. It is a great start to learning about entrepreneurial concepts. 

Step in if your child gets overwhelmed by some of the math, but don’t coddle them. It’s a fine line, but just being around finances in a relatable setting will help them in the future. 

Insurance Concepts

Insurance of all kinds can seem very foreign to most young kids and even teenagers. This is why adults are often not prepared for these topics when they need to purchase insurance. Talk about the main types of insurance with your kids: life, auto, health, and homeowners. 

Kids may find life insurance to be depressing. They don’t want to think about their parents dying, but they need to know what would happen just in case. Showing them that there is money in reserve that can be claimed after your death should relieve some stress about what happens after the fact. 

Auto insurance is important to start talking about when kids get into driving. Teens need to understand the expensive nature of making mistakes on the road. Showing them the discounted rates available with good driving habits will go a long way to building skills behind the wheel. Make sure they understand how long car insurance claims stay on your record.

Homeowners insurance is also vital to discuss. Kids are really connected to their homes. It’s something very special to them, and insurance protects it in case of an emergency. 

Showing them what you pay every month for homeowners insurance can give them an idea of some of the finances that adults have to pay. It puts the bug in their ear, at least. And that’s really what most of these financial lessons are for. 

Many young people and children lack a complete knowledge of how money works. Just being around things like insurance, sales, coupons, and credit cards makes them familiar with them in the future. And being a financial-savvy person in adulthood is more critical than ever. 

Shawn Laib writes and researches for the life insurance comparison site, QuickQuote.com. He wants to help parents understand how they can help their kids with money and finances from an early age. 

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