Building Strong Foundations: How to Empower Financial Fitness In Future Generations
According to a recent survey by Junior Achievement and Citizens Financial, a staggering 78% of teenagers are stressed about money, with half of them worrying about their parents' ability to cover expenses.
This statistic is shocking and worrisome.
The good news is that 73% of teens surveyed expressed a desire to learn more about managing finances.
The even better news? You can help.
Whether it’s adult children or young grandkids, encouraging financial wellness amongst the next generation is critical. And, at Entrust Wealth Partners, we believe it’s a topic that warrants more attention and resources. Here’s how you can help your family develop strong financial habits that will benefit them now and for generations to come.
1. Start Early
Financial education should begin at a young age. Simple concepts such as saving, spending, and sharing can be introduced early on. Use everyday activities, like grocery shopping, to teach children about money. Explain the difference between needs and wants, and involve them in making small spending decisions.
Tip: Set up a savings account for your child and encourage them to deposit a portion of any money they receive, whether it's from allowances, gifts, or earnings from chores.
2. Lead by Example
Children learn by observing the adults around them. Demonstrate good financial habits in your own life. Show them how you budget, save, and invest. Be transparent about financial decisions when appropriate, and explain the rationale behind them.
Tip: Share your financial goals with your children and involve them in planning for family vacations or large purchases to illustrate the importance of saving and budgeting.
3. Make Financial Education Fun
Learning about money doesn’t have to be boring. Use games and activities to teach financial concepts. Board games like Monopoly or online resources that simulate stock trading can make learning about money engaging and interactive.
Tip: Consider using financial apps designed for children, which can help them manage their allowance, set savings goals, and track their spending. One of our favorites is GoHenry, which offers a debit card and app for kids.
4. Encourage Entrepreneurial Spirit
Encourage your children and grandchildren to start their own small businesses, such as lemonade stands, dog walking, or tutoring. This hands-on experience teaches them valuable lessons about earning, budgeting, and the value of hard work.
Tip: Help them set up a simple business plan, keep track of their earnings and expenses, and reinvest their profits.
5. Teach the Value of Giving
Philanthropy is an important aspect of financial fitness. Teach your children the importance of giving back to the community. This can be through donating a portion of their allowance to charity or volunteering their time.
Tip: Establish a family tradition of giving, such as participating in a charity event or setting up a family fund to support causes you care about.
6. Introduce the Basics of Investing
As your children grow older, introduce them to the basics of investing. Explain how stocks, bonds, and mutual funds work. You can even set up a custodial investment account where they can choose investments and track their performance.
Tip: Consider matching their investment contributions to incentivize saving and investing. This can mimic an employer’s 401(k) match and reinforce the habit of investing for the future.
7. Plan for Major Milestones
Help your children and grandchildren plan for major financial milestones, such as buying a car, going to college, or purchasing a home. Teach them how to set long-term goals and create a plan to achieve them.
Tip: Create a timeline for these milestones and discuss the steps needed to prepare financially for each one.
8. Utilize Professional Guidance
Consider enlisting the help of a member of our team to provide your children with professional guidance. Our team can offer tailored advice, help them understand complex financial concepts, and set them on the right path.
Tip: Partner with us to schedule regular family meetings to discuss your overall financial plan and how it impacts each family member.
Raising financially fit children and grandchildren is a lifelong endeavor that requires patience, education, and leading by example. By instilling good financial habits early on and reinforcing them throughout their lives, you can ensure that your family is well-prepared to manage their finances wisely and build a secure financial future.
At Entrust Wealth Partners, we’re dedicated to helping families achieve financial success across generations. Contact us today to learn more about our comprehensive financial education programs and how we can support your family’s financial journey.
Investing includes risks, including fluctuating prices and loss of principal. No strategy assures success or protects against loss.
