Financial Literacy for Families


Do you and your family know how to navigate the internet, but know nothing about cash flow? Here are a few simple steps towards providing your family with invaluable financial literacy, where all can participate, learn and have fun:

Teach children that to buy something you have to have the money to purchase it. Funds should come from cash flow (income) or savings, not through borrowing. By using this approach, you teach your family fiscal responsibility, thereby providing them with the tools for a solid financial future.

Help your child to earn and to save money.Encourage your children to earn money through jobs such as babysitting,  chores around the house, or even a paper route (which is how Warren Buffet started). As your child starts to earn money, make sure that a portion of his or her earnings is saved. When your child is young, savings can be put into a piggy bank or a bank account. As your child matures, have him or her invest in a mutual fund. Many funds allow participants to invest as little as $25 a month.

Teach your children information about the economy. The news is full of information about topics such as expected job growth, inflation rates, rates of unemployment, mortgage rates, etc. By discussing this kind of information with your family, you will support financial awareness and foster financial discipline.

It’s OK to tell your children that you cannot afford an item. By doing so, you are reinforcing the message that one needs to have the funds to pay for something. For example, if your family wants to go on a vacation, have the entire family work together to contribute what each party can towards the common goal. That way, all will share in both the labor and the reward.

When the children are older, pick a stock and track it as a family. This group activity will teach everyone how the stock market works. It’s not necessary to actually invest in the stock. Merely track a stock, based upon a virtual investment. By engaging in this hobby, all family members will learn about the stock market, gain a greater understanding of financial sectors and reporting, and eliminate any feelings of intimidation concerned with investing.

 

These are just a few steps one can take towards obtaining financial literacy, an invaluable gift for you and your family. In today’s environment, financial literacy is not a luxury, but a necessity

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