There’s no doubt that COVID-19 has brought a lot of added stressors to your family and effected your family and your kids most of all. With schools getting closed here in San Diego, a lot of parents were forced to finish out the school year with homeschooling. We know how difficult that is and that lots of parents were grateful when summer rolled around.
Now that classes aren’t in session and you may have some extra time at home, it’s the perfect time to teach your children some important lessons about money. Jill Cornfield CNBC wrote these dos and don’ts on teaching your kinds lifelong money lessons during the pandemic.
1. Talk about it
Many parents make a conscious effort to not talk about finances in front of their children, especially if money is tight. Doing this can actually set your child up for failure long term because of their lack of knowledge and experience with money. Starting with teaching your kids the value of money at a young age can set them up for success.
2. “No” is an option
Another common misconception with parents is that you should be able to give your children everything they want/ask for. It’s important to explain to your kids early on that parents must balance their financial needs and futures with the wants of the children.
3. Teach the Basics
One of the best things you can do for your child is to teach them the values of saving money and budgeting as soon as they start making money. Even if it’s just allowance – teach your child to put 10% of their earnings into their piggy bank. This will help your kids gets accustomed to saving which will stick with them in their adult years. Getting your kids set up on an easy budget plan for their expenses as a teenager is also a great idea.
4. Make them wait
It’s very important to stress the difference between a want and a need and the importance of saving vs. spending. A good tactic for young kids that want something immediately is to have them write it down or draw it and return to the drawing two days later. The child may find that they no longer want the item or want something else instead. This is helping your child refrain from impulse buying as an adult.
5. Include them in big purchases
Not only is it good for older kids to see your purchase process to register the value of money, but it’s also great for kids to watch the art of the deal. Often times kids who have been around their parents negotiating for refunds or knowing their rights as a consumer will be better at these skills as adults.
6. Explain Insurance & Investments
As soon as your children are making money – you should schedule them an appointment with your family’s financial advisor to set up their retirement fund as early as possible. For example, A single $1,000 IRA contribution made at age 10, for example, could grow to $11,467 over 50 years, assuming a conservative 5% average annual growth rate. Not only is it great for them to understand the value of the investments, but also teaching them to understand the important of insurance will save them a lot of headaches and learning as an adult.
The era of COVID-19 has caused a lot of devastation but also provided many families with great opportunities like this. Talk to your kids about money today and if you have any questions please don’t hesitate to call us at (800) 313-PLAN(7526) or email us at firstname.lastname@example.org.