Preparing Your Kids for Financial Freedom: Are They Ready?

Watermelon. Corn-on-the cob. Fireworks after dark. Amid all the fun, it’s easy to forget that the Fourth of July is more than just another summertime barbecue: It’s a reminder that independence is worth fighting for.

For parents, teaching our kids what they need to know today so they can succeed tomorrow is an everyday challenge, whether it’s changing a car tire or preparing for a job interview. High on that list is financial wellness.

Talking to kids about money can be difficult, especially when it comes to how not to spend it. Whether your child is in kindergarten or college, there are some essential lessons every parent should share:

Lead by example. Kids learn by watching the adults around them. So, it’s on you to make responsible financial decisions – like avoiding impulse buys, saving wisely, and shopping for value – and to explain the reasons for those decisions to your child.

Start simple, but start early. There are many ways to teach young kids the basics of good saving habits, from traditional piggy banks to more tech-forward tools like PiggyBot and Bankaroo. Discuss the difference between wants and needs with your child. Let them know it’s okay to spend on “the fun stuff” sometimes – but only if they save up for it first.

Put lessons into practice. Older tweens and teens can start with a “training” debit card – one with custodial limits on its use. Set them up with a mobile banking app so they can see their money grow over time. Consider offering rewards for good habits like saving.

Talk about credit. The average American has over $5,000 in credit card debt, so if your child is 18 (or soon will be), make sure they understand how to manage their own credit. Once your teen is eligible, help them set up a card. It can be a scary transition, but it’s also an opportunity to share good habits for building and maintaining a credit score.

Collaborate on a financial road map. Financial planning isn’t always intuitive. Don’t assume your teen will “figure things out” when they live on their own. Instead, sit down and help them plan a mock budget. Include costs they might not fully understand, like health insurance and taxes.

Ask what goals they have for their future. Do they want to graduate debt-free, buy a home, start a business, or establish an emergency fund? Factor those goals into their financial plan as monthly or yearly saving targets. Help them connect good habits to their long-term outcomes.

Most of all, be open to new ideas. Money management practices and priorities change over time, and that’s okay. Your job is to prepare your child for the times they’ll live in, which will be different from your own.

The important thing isn’t having all the answers to life’s challenges – it’s having the right attitude, values, and habits to tackle them successfully. And this Independence Day, that’s something we can all celebrate.