If there’d be one subject that can greatly impact the kids throughout their lives, it would be personal finance. Sadly, though, it’s one of the subjects that no one wants to teach them primarily because the parents themselves have a hard time dealing with finances and they’d just want to ignore subject.
Note, however, that it is not yet too late to repair problems in personal finance and having financial problems can be inevitable. One can hire the services of credit repair companies that’ll give you some solutions that can soon be taught to your kids.
Gregg Murset, CEO of My Job Chart, said “The practicality of teaching finance to kids is so important… it’s the one topic that they’ll actually use for the rest of their lives every day. But it’s the one topic that isn’t really taught.”
Here are some terms that experts say your kids should learn. It includes the appropriate age where you can teach the concept to them.
Savings (4 years old and up)
Savings is one of the best subjects to teach your children at a young age. This is primarily because it’s easy for kids to grasp the concept and it may have a huge impact to those who’ll embrace it early. Stacy Francis, the president and CEO of Francis Financial, said, “Saving means not using all of your money right away, but instead putting it aside for later.”
Budget (8 years old)
Having a budget means you are keeping track of your money and where it is or where it should be going. One of the popular ways that help parents teach kids on budgeting is the “give, save, & spend jars”; this enables kids to divide money between the jars. The “save” jar is the money allocated for long-term goals; the “spend” jar can be used for small purchases anytime; and the “give” jar will go to their chosen charity.
Loan (8 years old)
A loan is money or a thing borrowed that needs to be returned with interest. Although most kids get the general concept of a loan because chances are, they’ve lent something to their siblings or friends and expected that they’d get them back. Although taking out loans isn’t an entirely bad thing, parents should stress out that when loaning, it’s their responsibility to pay back what was borrowed.
Interest (8 to 10 years old)
Interest should be viewed in two perspectives: it is something you pay for when you borrow money or something that you earn when you let someone borrow your money. The Vice President of Prosperity Bank, Elizabeth Grahsl, said, “You would earn interest, if for example, ‘your sister runs out of her allowance but needs money this weekend. You could lend her $20 but charge her $2 in interest, which she will have to pay you back next week’.”
Investment (10 to 12 years old)
Investments are something that you will spend your money where you will earn profit in the long run. You should emphasize to your kids, however, that although investing in things may make them more money, it doesn’t always go that way. This is why it is a bad idea to put all the money in a risky investment; primarily because if it fails, you could lose everything.