Passing on good financial lessons to our kids is an important part of being a parent. We want the next generation to be equipped to make smart money decisions. Any kind of financial education is good, but there’s one money lesson all kids should learn.
The Power of Saving Over Time
Saving money should be at the forefront of any financial education. Savings are key to being financially stable, and key to growing wealth in the long term. Teaching kids to save money is essential to any other financial literacy.
However, it’s important to help children understand the power of saving over time. As adults, we know terms like compound interest and annual returns. We know that wealth takes time to build and that contributing small amounts of money to different accounts over years can yield huge returns.
That’s information we need to pass onto our kids. Very few of us are born into families of great wealth. In order to build it, we need to get our kids excited about saving early and continuing to save throughout the years.
Teaching children that small amounts of money can grow into a really big number teaches them patience, builds the habit of saving, and shows them that they can make big things happen for themselves through consistent, hard work.
It’s not only an important money lesson, it’s an important life lesson. We want to raise children that understand the value of hard work. The next generation should know that they can do anything, and be given the tools to actually go out and do it.
Part of the difficulty most Millennials faced was being told that they could be anything they wanted, but inheriting a professional and financial world that didn’t have much for them. Shocked by the price of our education, stuck in a low-wage cycle, and facing growing cost of living prices, Millennials needed to be financially literate as a generation, and we weren’t.
We can do better by our kids. By teaching them the important money lesson of saving early and consistently, we help them become more secure than we were.