When teaching children about finances, parents regularly focus on budgeting and saving. While those two topics are important and valuable, introducing kids to the concept of donating – or philanthropy – can help them develop into financially responsible adults. However, donating hard-earned money, or volunteering time, can be difficult to do, especially during these uncertain times. The earlier someone starts donating, though, the earlier they’ll see the financial benefits of doing so. Here are a few reasons why philanthropy can improve a child’s financial well-being in both the short- and long-term:
Teaches Math and Money Management Skills
When children start donating to charity, they become aware of their financial standing. If they give too much away, they won’t have any money left for themselves. Much like budgeting, philanthropy requires basic math and money management skills. By taking the time to figure out how much to set aside for their own needs and wants, children learn what portion of their money they can spare for others. Separating their money into different spending categories is a great, hands-on lesson in percentages, fractions, and decimals. Without a solid understanding of math and money management, even people in good financial standing can find themselves struggling to pay their bills. Learning these fundamental lessons can help children maintain a healthy financial well-being as they grow older. Plus, when someone commits to making a donation, they may become more attentive to their own finances to make sure they don’t fall behind.
Creates a Sense of Empowerment
When they give back to the community by donating money to others, children feel a sense of empowerment, and studies show a direct link between emotional health and financial health. Helping others can improve one’s own self-esteem, life satisfaction, and overall happiness. This, in turn, can lead to better financial health and good habits that may help them avoid unhealthy choices. For example, some people go shopping (sometimes called “retail therapy”) to help them cope when they are feeling down. In an attempt to project an image of success, they may buy expensive clothing, accessories, or other objects. However, turning to shopping for emotional satisfaction is a costly coping mechanism that often leads people to stray from their budgets, and then they end up feeling worse. The feeling of helping others, however, usually leads to satisfaction, and a healthy sense of self helps people stay committed to their long-term financial plans. So, to create an early sense of empowerment and promote positive emotional health in children, teach them to give back.
Helps With College and Job Applications
Along with gaining money management skills and a sense of empowerment, philanthropy can help advance a child’s career. As children start applying to colleges and seeking employment, they’ll likely be filling out applications. In an effort to admit or hire the ideal person, many colleges and employers prompt applicants to list their philanthropic efforts. Charitable giving isn’t a requirement, but being able to list charitable efforts helps a candidate stand out in a positive light when applications are reviewed. The earlier a child starts giving to charity and volunteering, the better off they will be when submitting applications. While it may seem counterintuitive to give money away, donating to charity can nurture empathy, instill money management skills, and teach both integrity and social responsibility to children. Helping others simply feels good, and if someone can gain valuable and beneficial financial lessons while doing so, that’s a win-win.