Financial Planning Tips for Kids: Books, Budgets, and More Resources
Gone are those days when parents waited until their 40s to begin financial planning for their children. In the past, children were viewed as a retirement plan. However, in recent years it has become increasingly difficult for adults to build a future for themselves the same way past generations did. Financial planning for kids can start as early as preschool.
Financial decisions shouldn’t be made lightly and also shouldn’t be procrastinated. Parents are essentially their children’s financial advisors. Knowing what financial planning tips for children you can pass on to them is important. In this guide, we’ll look at financial planning books for kids, financial mistakes to avoid, and other financial planning resources for kids.
Top 5 Financial Planning Tips for Kids
Knowing how to plan for retirement is important for parents, but it’s also important that you’re setting your kids up for financial success. As a parent, you should set financial goals for your kids. Try out some of the tips below to make sure your kids start off on the right foot.
1. Teach Your Kids About Money
It’s important that you teach your children about money to make sure they learn good money habits. You should start teaching them early so that they know how to handle money by the time they reach their teenage years. Their knowledge should grow to the point where they can make reasonable spending decisions on their own.
2. Stick to a Plan
Once you have set up a financial plan for your kids, you must stick to it. Making an effective financial plan is important. However, that’s not enough. You also must stick to the plan if you want it to be able to avoid taking out student loans as they head for college.
3. Sign Up for a Good Insurance Plan
Part of good financial spending is ensuring that your children have the necessary insurance, like a health insurance plan. You should also get a life insurance policy for yourself. This is a key part of financial planning because it means you’ll be able to better manage any unexpected expense that comes up.
4. Set Up a College Savings Account
Whether your kid chooses to go to a trade school, a public school, or a private school, a school savings bank account will help them pay their college tuition. Postsecondary education is an important part of your kid’s life that you don’t want them to miss out simply because you didn’t set aside enough for educational expenses.
5. Consider Your Own Retirement
Children are often expected to shoulder the financial burden of their parents once retirement draws near. However, this won’t be necessary if you take the time to plan. If you set up a retirement fund early, you are less likely to rely on your children financially later on in life.
5 Financial Mistakes to Avoid for Kids
Raising kids and planning for their future is hard. To help you do your best to get it right, we have compiled the list below. Get acquainted with some common mistakes made by other parents so you can avoid doing the same.
1. Prioritizing Your Retirement Fund
While saving for retirement is important to reduce so that you won’t become dependent on your kids, it is a bad idea for parents to prioritize this over their children’s futures. There should be a balance between appropriate retirement savings and the amount you spend on child care.
2. Living Without a Safety Net
All professional advice indicates that living without tucking away additional money for emergencies is a bad idea. Especially where kids are concerned, you should make sure you can afford major events related to their health or education.
3. Not Teaching Your Kids How to Spend Smart
Children must cultivate sound behaviors around money. If you ignore their bad spending decisions, they will continue to make the same mistake. Teach them about household expenses and credit cards so that they can apply this knowledge in the future. Remember, the attitude a child has toward money will stick with them long-term, so make sure they spend smart.
4. Ignoring Your Children’s Education
No amount of savings can replace the importance of formal education. This is what prepares them for their future career path. If you overlook the impact education has on your kids, you will be doing them a huge disservice. Spend as much as you can afford to on school tuition to make sure your children are learning as much as possible.
5. Not Starting to Save Early
Plenty of parents make the mistake of waiting until their kids come of age before they start saving. As a parent, you should start saving up as early as possible. As soon as your first kid is born, start setting aside small amounts of money so you know they will be set up for success.
How to Make a Kid’s Budget
Becoming a parent is not an easy job. You essentially have to become a financial advisor in your free time, as well as an unconditional guardian. One way to make it easier is to create a kid’s financial budget. Writing it down on paper and posting it somewhere where your child can see it is a good way to promote money management.
Kid’s Sample Budget
|Expense or Income||Amount (per year)|
|Holiday Gifts||+ $150|
Financial Planning Resources for Kids
Luckily, you don’t have to do all the heavy lifting. There are many financial planning resources your kids can turn to to learn more. Check out the classes, books, and software study options listed below.
Financial Classes for Kids
- InCharge Debt Solutions. These free Financial Literacy for Kids lessons are for kids from preschool through second grade. In them, they learn how to create simple spending plans, how to earn money at home, and the names of coins and bills.
- MoneyTime. MoneyTime has a series of financial education classes for kids from ages 10 to 14. In the classes, they’ll learn about how banking works, why they should create budgets, and how to establish smart spending habits.
- Outschool. Outschool’s Financial Literacy for Kids classes teach kids all about personal finance, including how the stock market works, and the differences between credit and debit cards.
- Orange Owl Academy. This online school offers a range of Financial Literacy for Kids lessons. The 15-minute video lessons will teach kids to manage their money with a healthy mindset by associating money with core life values.
- Money Confident Kids. This website contains lessons on basics like goal setting and decision making. In more advanced lessons, it also breaks down inflation, asset allocation, and diversification. This is a good way to prepare your teenager for a job.
Financial Planning Books for Kids
- Alexander, Who Used to Be Rich Last Sunday. This book teaches children the importance of effective financial planning. In the picture book, Alexander grapples with money management.
- The Giving Tree. This book talks about the relationship between a generous tree and a boy who collected apples from the tree. The tree becomes worried that the boy isn’t satisfied even though she gave him material things. This is a nuanced tale of how kids should view wealth and sharing.
- The Wealthy Barber: Everyone’s Common-Sense Guide to Becoming Financially Independent. This is one among a series of financial planning books by David Chilton. The books convey financial and business advice to kids through fun characters.
- Rock, Brock and the Savings Shock. This children’s book features a story of twin boys who are given the same amount of money each week. However, they take very different approaches to saving.
- Learn to Earn: A Beginner’s Guide to the Basics of Investing. This book enlightens children on the basic principles of the stock market and how businesses operate.
Financial Planning Software for Kids
- RoosterMoney. This financial planning app helps kids learn how to budget by monitoring how much they make on chores and how much they spend.
- Piggybot. Piggybot is a virtual piggy bank app that’s geared toward young children. Kids create a virtual account on the app and use it to save, spend, and share their earnings.
- Allowance+. This app allows you to transfer money to your children and monitor how they spend. It is free to use and kids can see their spending and earning progress.
- Bankaroo. Bankaroo is an app and website that acts as a virtual bank account. Even though no actual money is involved, children will learn how to create budgets and how to reach their savings goals.
- gohenry. This is a financial literacy app that was designed as a partnership with MasterCard. Parents use it to transfer real money to their children, monitor their earnings, and make sure they spend responsibly.
Meet Your Kid Financial Goals in 2022
The beginning of a new year brings along anticipation of a brighter future. In 2022, you can meet your financial goals for your children with the right planning. It’s important to set aside time to teach your kids about money management. Take advantage of the resources above to ensure that they are on a path toward their own financial success later in life.
Financial Planning for Kids FAQ
Yes, you can do your own financial planning. There are several types of personal finance software packages that can help you. Some of these include Quicken, RightCapital, and Banktree.
Yes, you can plan for tomorrow regardless of how much you are struggling to afford your daily costs. The most important step is to create a budget. Also, having a sound investment strategy can help you contain variable expenses.
There is no actual rule for how much you should save. That depends on how many children you have, and what your goals are for them and yourself. The amount you save each year will also depend on your income level and age.
A financial plan should include short-term goals, an investment portfolio, your net worth, and retirement goals.