Parents invest a lot in their children’s education. Doing so certainly is a good thing, but is the education truly broad-based? Does the learning process include teaching children about the basics of finance, investing, and savings? Managing finances and putting away money for the future are definitely good habits to have. Parents really should teach their children about important skills, such as financial responsibility.
HCR Wealth Advisors wants to assist parents with their children’s financial education. While the firm’s focus is to provide investment advice and financial planning to its clients, the firm took the time to publish an educational article on the subject of raising a child’s financial IQ. Insights in the article can help parents improve their child’s knowledge about money matters.
One beneficial strategy to employ involves combining payment for chores with a budget plan. The idea behind this strategy isn’t too difficult to comprehend. Rather than just receiving “unearned income,” the youngsters would be paid based on performing specific chores. This way, children learn the value of work at a very early age. The more work they put in, the more they earn. A strong work ethic can be developed this way.
No one should expect weekly income to be unlimited. This is true whether discussing a child’s allowance or the income of a high-earning adult. Teaching a child to work within a budget sets the stage for showing the value of the long-term savings. Who knows? The child may grow up to become financially successful and meet with an HCR Wealth representative as an adult.
Parents could easily teach a child about savings and investing right now. Opening up a savings account with them or purchasing bonds in his or her name shows exactly how money management works. Once the young one sees the way money grows thanks to compounding interest, the true value of savings may be learned.
HCR Wealth Advisors is not affiliated with this website.