All of us are aware money does not grow on trees; hence personal finance should be explained to kids from a very young age. Most teens have no clue where money comes from and where it goes. Various aspects of personal finance such as income, expenses, mortgage, investment and retirement accounts are never discussed with teens. Many financial problems faced later in life can be avoided if they are provided with proper personal finance solutions from their early years. Just like physical education, personal finance should also be a part of their syllabus so that they can understand the value of earning and spending money judiciously since the very beginning.
Financial experts claim that there are a few things which are considered a must when it comes to imparting personal finance knowledge to teenagers. Also if your kids aren’t aware of these things currently, then it is high time you start introducing them to such issues. Some of them are mentioned below –
* Knowing where money goes – It is essential to keep track of your expenditures on a daily basis. It doesn’t matter whether you are utilizing a software that allows you to do so or simply do in on paper and pencil. The first step towards controlling your expenditure doesn’t mean you don’t eat out or don’t go for vacations. When you are maintaining a record, it is not your parents’ money you’re saving, it is your own.
* Invest early – It is crucial to start earning early in order to be financially independent, but it is equally important to start saving or investing early. The golden rule of any investing plan is to start early, simply because time is on your side. Teens must also be taught to start investing early to reap the benefits of compounding. It is not necessary that you need to be earning to start investing. As a teenager, any excess pocket money can be saved and invested in useful avenues.
* Spend thoughtfully – Encourage your kids to save money from an early age. Let them understand the value of living