It’s never too early to start teaching your children about their finances – after all, financial skills are essential to navigating life, and can help steer your children away from running up debt during their working and later years.
That’s why, in today’s post, we’re offering advice on giving financial education from pocket money to pensions, discussing everything from saving money to starting a side hustle – we’re looking at the importance of financial education from the moment we can speak to retirement age.
The early years
It’s inevitable that, one day, your children will have to manage their own money in terms of their bank accounts and finances. That’s why financial education should begin at home – if you have bad financial habits of your own, these can easily be passed on to your children.
To teach your children the value of money in a simple way, when you’re buying a special treat (whether that’s for them or for yourself), it’s best that you ensure they know that it has been saved for, and isn’t available all of the time. A great way to instil this rule into their mindset is by telling children that they’ll need to save for any toys that they may request using their pocket money, and that as parents, you won’t be paying for their additional items all of the time.
Teaching your children how to save is just as important as teaching them about saving for something that they really want. For example, if you find yourself a little strapped for cash one month, it may be a good idea to explain to them what’s happening – in simple terms, of course. Some effective ways to do so are by stressing the importance of turning off lights, computers and switches. As there are limited formal educational lessons of financial education at primary school level, teaching your children financial responsibility should start in the home.
During formal education
Recent studies have found that 55% of secondary school teachers believe there isn’t enough focus on preparing teenagers to manage their own finances. As teenage years are likely to come hand-in-hand with budding financial independence, it’s essential that you begin teaching financial education in the home. It’s a good idea to encourage saving during teenage years, but instead of short-term materialistic items such as makeup or a video game, consider setting long-term goals together such as a mobile phone.
In the later teenage years, it’s likely that your child may want to go to University or College. Tackling the subject honestly is the best way to help them prepare for these years, after all, they’ll be managing their own money when they’re away from home. To prepare them for money management, you could even sit down with them and define a weekly or monthly budget, which defines their outgoings and income. To help with any additional costs, encourage your child to get a part-time job, as working and handling your own money is undoubtedly the best way to learn the value of money as they’ll be earning it themselves.
While understanding your finances will entirely depend on the type of job you have and how much you’re earning, the key thing to understand is when to splurge and when to save. After all, this is a time when we’re beginning to figure out our future, which determines our access to opportunities as a result.
This is when it’s time to budget based on your income, expenses and savings, which will inform you of when to be frugal and when it’s okay to splurge. By taking some time out to get smarter about your money and expand your financial intelligence, you’ll be improving your ability to increase your wealth in the future. Whether you’re using apps or spreadsheets to monitor your spending, it’s time to get savvy with what you’re earning and what you’re spending – because, naturally, if you have a taste for more extravagant items, you’re going to need more money to afford them.
The retirement years
As you entire your retirement years, you may start thinking about saving for your pension or ways to make your pension fund stretch. If you need to play catch-up on your retirement savings, you may want to start a side hustle. Some examples include making investments or learning forex trading to make your funds go a little further. As you’re likely to have some extra time during your retirement, this is the perfect time to learn a new skill, or build on your existing skill set by undertaking some trading courses or online ‘how to’ classes.
It’s essential that you research your new hustle thoroughly and determine what you can actually afford to lose. After all, if you invest more than you can afford, you could end up significantly out of pocket. If you’re unsure, it’s best to consult a financial advisor or a broker before getting started – the more advice you receive, the better!
The financial world is constantly changing, so it’s essential that we’re constantly learning and remain willing to improve our financial management to, ultimately, increase our chances of reaching our goals. To help your finances stretch a little further, join us on one of our award-winning online forex trading courses today.