The Time Is Now To Immediately Start Your Child On The Road To Financial Literacy With These Five Hands-On Tips

Being a parent is hard. It’s harder when you can’t rely on anyone or anything else for help.

Perhaps the greatest challenge any parent faces is the financial burden of raising children. Because young children often can’t yet comprehend money matters, parents too quickly just do everything themselves.

This routine unfortunately can continue well into the child’s adult years.

Have you ever experienced a sleepless night wondering if your child avoided the late payment fee on some monthly bill? Don’t you sleep better once you’re confident your child has reached that level of monetary maturity where you no longer have to worry about your child forgetting to pay that bill on time?

Would you be delighted if there were a way to accelerate your child’s financial literacy so that age of maturity is reached much quicker?

Here’s good news! There’s a way to do this without depending on anyone else.

Parents like you can immediately start a child on the road to financial literacy. And there’s no time better to begin than right now.

Kids often respond better when actively engaged as opposed to being passively lectured. Here are five hands-on tips you can begin without delay to quicken your child’s travels along the learning curve of financial literacy and towards the Eden of financial independence.

And if you are paying close attention, you may just discover the hidden Easter Egg in each tip—the common thread that binds them all.

Honing Household Habits

They say “charity begins at home.” So too does financial literacy. And it starts with parents demonstrating the kind of routine that leads to good fiscal health. “The best way parents can help influence their kids with positive money habits and behaviors is by displaying positive personal habits around savings,” says Kayse Kress, Director of Financial Planning at Physician Wealth Services in West Hartford, Connecticut.

You’re going to find these tips will require commitment, discipline and patience on the part of the parent. This is especially critical with this first tip because Kress suggests having your kids be part of the household budget discussion, at least within the areas they are old enough to understand.

“As early as toddlers, you can play store and exchange play money for toys and goods,” says Kress. “Kids are smart and will start to understand the basics of the exchange of goods and services. As your child gets older and can do chores or earn an allowance it is a great time to open a savings account and have them use their own money to buy something that takes time to save for. When they get their first job they can start saving into long-term investment accounts such as Roth IRAs and other tax-advantaged savings accounts.”

Matter-of-Fact Money Management

Money is a number, and numbers require math. If you want to quicken the pace of financial learning, you’ll need to introduce your child to simple mathematical concepts like adding and subtracting even before your child begins any formal education.

The easiest way to introduce simple math is to play a board game where you move your piece based on the number you roll on a single die. Just getting your child to count the number of moves is a step forward. You’ll find it’s better if the move is based on a pair of dice. The repetitive adding of two dice is a form of rote learning that can effectively teach your child.

Once your child masters the math of adding and subtracting, it’s time to bring in money management. Again, this can be accomplished through a board game that involves money (like Monopoly), but you really need to focus on the real-world sooner rather than later.

Don’t be afraid to offer your own practices as an example. Then find a way to have your child mimic what you’re doing, if even on a very small scale.

“The keyword here is a savings model: parents who offer some transparency to kids about money management offer them actions that speak louder than words,” says Michelle Fait, Founder/Financial Life Planner at Satori Financial LLC in Seattle. “A high school kid with a part-time job can have a Roth IRA; offering to match any funds the child saves can be one way to help plant the planning seed. Just by talking about money instead of making it a taboo can make a huge difference in the way a child manages their finances.”

Dependable Direct Discussions

Start treating your child like an adult before your child’s eighteenth birthday. Here is another good example of where that commitment, discipline, and patience comes in. Your child may not initially respond like an adult. Don’t give up. Eventually, your child will live up to your expectations.

By talking about money in this direct fashion, you signal to your child the importance of the subject. “I think having open and honest conversations about money from the get-go is very powerful,” says Abbey L. Henderson, CEO, wealth advisor, and coach at Abaris Financial Group in Concord, Massachusetts.

These discussions, as a matter of practicality, will start off as lectures. You’ll need to move them to the laboratory as quickly as you can, though, to take advantage of your child’s original enthusiasm for the subject. By getting your child’s feet wet, your child is more likely to wade deeper into the pool of building long-term wealth.

One idea Henderson always recommends to parents is that “they start funding Roth IRAs for their kids as soon as he or she has some earned income. It’s a great way to model the importance of saving for retirement and also teaching the kids about investing.”

Age Appropriate Apprenticeship

Treating your child as an adult does have its practical limits. For example, child labor laws limit what your child can do in terms of working for other people. You have much greater leeway if your child works for you.

You don’t have to own a business to have your child work for you (although you may find greater benefits than you might expect if you do). Simply bringing your child into the family “business” of maintaining a household (as mentioned earlier) will do the trick.

While the overall strategy is to increase your child’s financial knowledge and understanding, the underlying tactics shift with your child’s age. “Sharing age-appropriate information early with children is key,” says Howard Safer, CEO of Argent Trust Company in Nashville.

For example, you might ask a preschooler to help walk the dog with you, but it’s of little value to offer that toddler an allowance if the child can’t yet add or subtract and has no concept of what a check-out counter is used for at the store.

An allowance might be more appropriate for an elementary school child instead. However, your goal as a parent is to move beyond the allowance.

The fun really begins once the child starts working for a paycheck. Then you can broaden their understanding of saving, investing and the glorious benefits of compounding. “Introducing Roth IRA’s when children have their first earned income is a great start,” says Safer.

Practically Perfect Planning

You don’t want to limit your definition of financial literacy to just math. Much of this topic requires organizational skills as well.

Think of it as an exercise in project management.

For example, if the family decides it’s time to install a swimming pool or build a shed, involve your child in the totality of the process. It’s not just about saving and spending, it’s about planning and procuring. What permits are needed? What materials are needed? What is the relevant timing between all the necessary steps?

Building a shed, for example, can then become a metaphor for building a solid financial foundation for life. This also requires planning, identifying a series of steps and then executing that plan.

“Be an advocate for planning!” says Chantel Bonneau, Wealth Management Adviser. “If you have the means, encourage your child to begin saving for retirement as early as possible — potentially even provide a ‘match’ for your child—essentially modeling a 401k. For example, if your 17-year-old has a job, offer to match up to $50/month so they put that into a Roth IRA and begin the habit of regular contributions over time.”

The Common Thread

Do you remember when your parents taught you how to drive? It was mostly your parents explaining as they drove. Then it was mostly your parents explaining as you drove (quite tentatively at first).

Remember how you were chomping at the bit to take that car out on the open road all by yourself?

Teaching your child to go it alone on the road to financial literacy is no different. Eventually, you’ve got to hand the child the keys and let your child drive on that open road. Oh, what you would give to be riding in a helicopter above your young motorist.

When it comes to financial literacy, you can hover. The common thread in each of these tips is the Child IRA. It’s easy to start a Child IRA, but your child needs you because a minor cannot establish one without a parent or guardian’s signature.

In the beginning, you’ll want to ride shotgun as you explain what each monthly statement says, how to pick investments and how to buy (and sell) investments.

Ultimately, your child will need to leave the nest and fly solo.

And you can sleep well, knowing you’ve taught your child how to be financially self-reliant.

This article was written by Chris Carosa from Forbes and was legally licensed by AdvisorStream through the NewsCred publisher network.