Raising Kids to be Financially Aware

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A lot of parents in America still find it off-limits to discuss money issues with their kids. Parents toil to make the money and the kids ask them to spend some, and the story ends there. Financial experts advise that it is equally important for kids to grasp the basics of saving, credit, investment and consumerism as it is for adults. When kids are raised with full financial consciousness, they are more likely to have control over their money in future and have less chances of getting trapped in the dreadful cycle of debt.

Kids are curious and, long before they start taking keen interest in money, they’re already observing the way you handle home finances. What kids pick from watching you deal with money forms the basis of their attitudes towards financial matters – possibly for the rest of their lives. It therefore turns out that making your kids financially aware is a step-by-step process that begins with setting a good example.

However, this has a good and bad side to it. If your kids observe that you like to be a little creative with money by having regular forays into shopping sprees, they are likely to adopt your spendthrift habits. On the other hand, if you are frugal with money, your kids will adopt prudent tendencies when it comes to spending and they will incorporate them into their own financial strategies in future. If you want your kids to follow your lead, be cautious with money and delay gratification to save for the future. Use every saving opportunity at your disposal, like coupons, and get good bargains for whatever you buy.

Investment opportunities for kids

One of the best ways to raise financially astute children is to introduce them to investment opportunities at an early age. Before you embark on this long term project, start with the basics.

You need to help your children understand what investing means and why it is important for their future. It’s easier to begin by sharing your own viewpoint on investment. Make it clear to them that while saving is good, it is usually for short-term goals and, investment is for meeting their long term-goals, something that can profit them possibly for a lifetime.

When your kids have some idea about investment, the next thing is to introduce them to risk and reward. You only need to introduce subtle details here, not complicated financial analytics. They need to know that highly rewarding investments are often associated with greater risk, and vice versa. Basically, you should dwell on explaining why it is better to invest for the long haul. When you feel these basics have sunk in, it’s time for reality: choose an investment plan for them. Here are some choices for the young ones: