Financial prudence is something that we find glaringly missing among many adults, and in many cases, it has even brought about their ruin.
The statistics speak for themselves about this lack of financial prudence among adults. Americans, for example, owe $1.56 trillion in student loan debt while the total U.S credit card debt amounts to $1.03 trillion. This is spread among 196.8 million people, accounting for more than 79% of the adult population in the U.S.
Also, the average debt is a whopping $5,234 per cardholder while it is $8,750 per U.S household.
The numbers go on, but the big question is why do adults borrow so much money?
Some experts argue that many people who live below the poverty line have lots of gaps between their living expenses and income and this forces them to borrow money.
While this could be true, the sad reality is borrowing money has become an accepted way of life in society and it is deterring people from saving in the first place.
In other words, many people do not control their wants and this causes them to spend way more than what they earn, thereby putting them in a path of spiraling debt. It is also putting a lot of pressure on them and is eventually affecting their mental and physical health.
How can we stop all this? It all starts with education and financial prudence, and it has to start as early as possible.
Though it is difficult to impart financial prudence to adults today considering that they are already knee-deep in depth, we can definitely reach out to the younger generations and ensure that they don’t end up like the current generation of adults today.
If you also think along the same lines, here are some things you can do to promote good financial practices among kids.
1. Open savings accounts for kids
Encourage children from a young age to save money.
This practice will continue even when they become adults and can help them weather through financial problems that may crop up by simply tapping into their own savings instead of borrowing.
One good way to encourage this saving habit is to open a savings account for kids.
Most banks today offer a savings account for kids that are linked with the parent account. So, every dollar that a child earns by helping you around or any gifts that they may get can be deposited in the bank. This will help children to understand how a bank functions and how to keep track of their income and expenses.
Also, it will help to inculcate a sense of responsibility among children and they will start seeing the entire spending aspect in a new light.
Due to all this myriad of benefits, open a savings account today for your kids and see the difference it makes to their mental understanding.
2. Play fun games
One good way to educate children about financial prudence, but without sounding too boring, is to play fun games with them.
Use different money jars and help your children to distribute the money they have into different jars to meet the varying expenses. Go on a fun trip to the grocery store and encourage them to pick items under a certain limit, say $50.
You can even read a book or play some math games to encourage them to think about money and saving.
There are many online apps and games as well that teach children and help them to become money-savvy when they grow up.
The above suggestions are just to give you a broad idea of what you can do. Feel free to experiment and maybe even come up with your own ideas to make it a fun learning process for your kids.
3. Answer questions
When you talk about financial prudence, the natural curiosity of children will lead to lots of questions. They may want to know everything to understand what this is all about.
Make sure you spend enough time to teach them the varied aspects of finance and answer any questions or doubts they may have in this regard.
Never ignore your children’s questions as this will not help them get a complete picture of what you’re trying to say.
4. Teach to give
While saving is one part of the whole idea, teaching them to give back is equally important.
Teach them to save money and not horde it. Inculcate the values of giving away in charity and be a role model for your children as they learn through it all.
In all, financial prudence is an important learning that should be taught to kids as early as possible. Start with fun games and encourage them to do small things like saving their pennies to help them understand the whole concept.
Be a good role model for them and exercise financial prudence yourself so your children can learn from you.