It is your duty as parents to make sure your child is equipped with the necessary knowledge to grow into successful adults. Most of these skills are developed in school; however, financial education and its relevance is something many educational institutions leave out of the curriculum. Soon, your children graduate and shoulder more responsibilities outside of school, in the form of employment, proper financial management, and family planning: are they prepared to make life decisions that could impact their future?
Encourage Finding Part-Time Employment for Teens
It is often said that time is money. More accurately, time can be converted into money, with the right decisions. During summer break, persuade your children to search for part-time work instead of being cooped up at home. Mowing lawns, waiting at restaurants, and managing the cash register for small stores are some common choices for young adults with plenty of time in their hands. They may even seek internship positions in corporate settings if they are qualified enough.
In addition to employment responsibilities, teach your children that money is not just given; it is earned through hard work. Earning their own money is a good way to make them realize its value, and make smarter decisions when spending.
Educate Them About Insurance and Investments
Teach your children the meaning of financial terms such as assets, bonds, cash flows, and inflation. Assist them in opening a savings account (if they haven’t already) and discuss the entailment of investments and growth. The earlier they know how insurance and investments work, the sooner they can begin building up for their future financial security. Sharing financial challenges from your own experiences can help them relate to this subject.
Millennials are some of the most passionate and adventurous people in the world. Many of them already have financial independence in their list of goals; they want to build a life of their own, separate from their parents. Providing the necessary guidance while they are still in your care will enable them to achieve these goals.
Gradually Reduce Financial Support
Establishing financial independence is a gradual process. As your children’s savings account accumulates funds, you can let them shoulder certain aspects of their personal finances, one at a time. Allow them to get used to paying their own bills, buying their own things, and saving up for bigger investments such as real estate. While they are still learning to budget their money, mistakes will be made, and make sure they learn from these.
Cutting them off might not be as drastic as you’d expect. Many millennials are eager to live on their own and decide for themselves. Once they are capable and independent enough, they might decide to move out far sooner than you decide to have them leave.
Financial independence can only be achieved through discipline and proper planning. It takes years to develop the good habits and restraint in spending, making it vitals for members of the younger generations to begin learning them as soon as possible.
David Milberg is a financial analyst from New York City.