How To Develop Your Child’s Financial Skills
As a financial professional you understand, more than others, how important it is to train a child early to understand the value of money so that he or she will grow up to make good financial decisions. Try the following strategies to develop young people’s financial skills:
* Encourage family discussions on finance. At some point each day, discuss finance with your child. For example, have a conversation about whether an item’s value is worth its price.
* Play savings games. For example, if your child is going to the movies, agree to match the money he or she brings back home. This trains your child not to spend everything in his or her pocket at a given time. You can also encourage your child to come up with game ideas.
* Emphasize the benefits of savings accounts. Let children know that it’s good to save money in a piggy bank at home but better to have their money in a savings account. Explain that they will get more for their dollar. When discussing interest, always use language that children will understand.
* Relate stocks to companies that young people recognize. Talk about companies like McDonald’s and Disney. Tell your child that “if you owned stock in McDonald’s, every time you see cars in the parking lot, you’re getting some of that money.”
* Discuss security issues. Explain that if someone steals your child’s piggy bank, nobody replaces that money. If your house should burn down, his or her money will probably be gone. But if something happens at the bank, he or she has insurance.
* Encourage goal-setting. If your child wants to save for a bicycle, suggest that he or she price the bicycle and divide that by the amount he or she is saving per week. Then your child will know how long it will take to save the money.
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