Teach your children this vital skill

Financial literacy is a vital skill in today’s world. Will your children be able to handle their finances when they became adults? Here are tips to help ensure the answer is yes.

Shave spending. Take the weekly allowance to the next level by helping your child develop a budget. Review the results to reinforce good habits.

Stress savings. Even young children can grasp the power of compound interest. A simple example is asking your child to put a dollar in a piggy bank. Offer to pay five percent interest if the money is still there in a week or a month. Make the same offer at the end of the first time period, and pay “interest on the interest” as well.

Introduce investments. Create a portfolio, either real or paper, consisting of shares of one or more stocks or mutual funds. Make a game of charting the investment’s progress on a regular basis.

Cover credit. Take on the role of lender and let your child request an advance on a weekly allowance. Charge interest.

Talk taxes. Use word search or crossword puzzles to teach tax terminology. Consider creating a “Family Economy” game using examples from your own budget.

Lessons in financial responsibility can benefit your children now and in the future. Get them started on the right path.

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