One of the hardest challenges parents have is to teach kids about money. Having a conversation about saving, the value of money, and investing isn't easy. If you really think about it they don't really supply this education in schools. So it's left up to an outside sources or parent to help guide them into a secure financial future. Francine Fallas-Meyreles is a financial representative that runs a financial practice in New York specializing in providing strategic comprehensive advice to people and helping them reach their financial goals.She also often collaborates with fellow advisors to educate clients on risk and wealth management and solutions. When speaking with her, she is truly passionate about what she does. Helping others has also been something she has always done, and now she is doing it from the ground up. Starting with something so important financial literacy and freedom.
Q and A with Francine -
1. How would you suggest explaining to kids what money is?
A)Explain that Money Is a Tool. A. Tool used to pay for goods and or services.
B) Consider Giving Your Kids an Allowance. An allowance is a great way to teach kids the value of a dollar. ...
C) Stress the Importance of Planning
Explaining money to kids should be simplified and in easy numbers right concepts to understand, for example we teach adults to save 20-30% of their income, the rest can be issued for fixed and discretionary expenses.
For kids: you have $100 save $20 and put it in a savings account to earns interest. This builds confidence in kids that they can freely spend as long as they save that 20%.
2. How young should you start to explain saving and why?
The conversation needs to start young, I would say 3 to 4 yrs old- as they are old enough to understand and see parents spend money. Parents should think of this as your essentially teaching a future adult and how they handle the relationship with money. Teach them the importance of having money saved for something they want or an emergency. Take them when they are a little older to the bank, in this new technology era is hard. Have them deposit there money in savings. Have them use ATM. Your essentially teaching about money and life skills.
3. What are some suggestions on what they should save for and what ages?
Parents should open and account for kids as soon as they are in the womb. I know is sounds funny. However with the cost of living and education rising there needs to be a safety net to be able to pay for these. As far as the child I would say have them continue to contribute into these accounts. Whether is gifts from family or allowance. Let them see the account grow.
4. How to teach them about investing and where should they start?
The concept of Investing is a bit tougher to explain specially when they are little. I would start around elementary years.
To start, begin with the basics of investing, including explaining that a stock — or share of a company — allows them to have ownership in that company. If you have an investment portfolio, show your child how it's grown over the years through compounding returns( compound interest)- then have them takes portion of the 20% they put in savings into an investment account. That parent can open one of these for the child.
Basic terms of investing:
The act of putting out money in order to gain a profit.
-a sum of money invested.
-a property, stock in which money is invested.
5. How to explain to them about a budget?
The way we explain budgeting to kids is:
A) Start With Goals, Wants and Needs. Talk with your child about money and how to use it wisely. ( perhaps drawn charts and pictures that will help them understand)
B) Save. When your child earns money, they should first set aside a portion for savings. $20 of the $100 example.
C) Share. Teaching children about charity at a young age is also useful. ...
D) Spend, freely.
This type of mentality will help the child have a healthy relationship with money.
Also as far as building credit for your children. Parents can put children as authorized users on their credit cards( you don’t have to give them the credit card) but just keep on the side. This builds there credit by the time kids are 18, they will high credit scores which gives them many options.
You can check out more about Francine @Francine.meyreles@nm.com
Written by
Karina Mauro