By Liz Moisio, J.D. – Vice President & Wealth Management Advisor
Regardless of the age of your children, the first step in educating them about finances is communicating what money means to you. From there, focus on familiarizing your children with the concepts of earning, spending, saving, investing, and giving.
Ideally, engage them early on and teach them not to be embarrassed when dealing with money challenges. Use this time to learn what your kids are interested in, what their goals are, and what they envision for their financial future.
As early as the age of two, begin teaching the basics of how money works by pretending to work in a play-like store – exchanging play money for goods. By age three, introduce the concepts of opportunity cost and delayed gratification. Begin by showing your children how to make change, demonstrating the notion that making a purchase results in less money.
When they receive money, allow children to make their own spending choices and don’t shelter them from an impulsive purchase, rather use this as an opportunity to teach your children about the disappointment that results from an impulsive purchase and the cost of making poor choices with money.
Teaching your children the cost of poor spending now with $10 of birthday money will teach them to make better spending choices and minimize the chance they will make $1,000 or $10,000 mistakes as an adult.
At Central Trust Company, our professionals provide financial planning, tax planning, and investment advice to help you manage money responsibly…even help with teaching your children about money.