LeConte Wealth Management offers tips for parents as National Financial Literacy Month is just around the corner in April
Time and again, parents will tell their children, “Do as I say, not as I do.” Yet, this old adage has no place in a family’s vernacular when it comes to financial literacy.
“Financial literacy is a foundational concept, which means that good habits and good decisions have a positive compounding effect,” said Andy Oakes, financial adviser for LeConte Wealth Management. “But the opposite is true as well, and maybe you want to save your children a lot of the headaches you’re experiencing because of decisions you wish you could revisit.”
It is never too late to take control of one’s finances. Sometimes the simplest lessons are the best, especially when it comes to teaching children about the value of healthy financial habits.
As Benjamin Franklin once said, “An investment in knowledge always pays the best interest.” When it comes to teaching children about money and personal financial responsibility, the earlier money lessons are learned, the better.
According to investorguide.com, “the benefits of teaching children about money are both short- and long-term. They may develop strong saving habits, learn how to make smart purchases, begin to understand the true meaning of ‘investment,’ and perhaps even learn why they can’t always have everything they want. By teaching the value of saving for the future, you can help them plan for financial security and avoid potential debt accumulation.”
LeConte Wealth Management offers three tips that can serve children (as well as anyone) well with money management:
- Start saving early. Start a savings account at a local bank for your child, and let your child be involved in the saving process. Parents could consider a rewards system for saving money. Depending on what would be most appropriate for each individual child, this reward could be a favorite dessert to extra cash for the savings account. The lessons learned earliest are often best retained, and becoming a diligent “saver” early in life is how most of LeConte’s clients became the “millionaire next door.” For example, depositing $5 a week from a summer job into a savings account now, could be the basis for saving $5,000 per month in a retirement plan when your child settles into a successful career.
- Use common sense. Depending on the age of the child, a parent could start an allowance schedule or encourage a child to earn some income on his/her own by doing such activities as childcare or lawn care. Parents should make sure the child uses common sense managing the money, such as saving a percentage, and spending a certain amount.
- Think long term. In an age of instant gratification, this can be difficult, but considering the long-term impact of decisions is probably the best shot anyone has at financial security. “When saving money, time is your friend,” Oakes said. “When borrowing money, time is your enemy.”
“Financial responsibility is ultimately about good decision making, and that is a lesson you can teach your children regardless of how much money you have,” Oakes said.
In addition, LeConte Wealth Management offers free online tools, financial glossary terms and other resources to help get the conversation started.
Hoy Grimm, managing partner at LeConte, added, “Anyone can take advantage of LeConte’s online tools and financial calculators with no sales pitch or obligation. We do not require people to register when using our website, so people can remain anonymous if they choose.”
For more information and access to free financial tools and calculators, go to calculators.