Influences from the media, friends, and other outside sources make it important to guide your children towards favorable money habits.
Start with the lessons below, have meaningful discussions, and lead by example as your kids begin to learn and practice money management skills. With proper guidance and opportunities to put these fundamentals into action, your little ones will be off to a great start.
Establishing Goals Is Important
Goals are often overlooked, but setting goals is an important part of anyone’s successes. Goals ensure we have something to work towards and that we’re well aware of what it will take to accomplish them. Help your children set a financial goal, develop a timeline, create a plan of action, and follow through.
Money Should Always Have Purpose
As kids start to earn money, it’s helpful to teach them early on that money is a tool to be used for different purposes. Encourage your kids to have accounts/jars/envelopes for each purpose. Start with the basics of saving, spending, and giving – then as they get older add investing. Sticking to a budget takes practice and discipline, so it’s best to start now.
Parents Aren’t A Bank
Sometimes the simplest answer can also be the hardest, especially when it comes to the pleas of your kids. However, closing your wallet, being direct, and saying “no” will teach them the well-known fact that money doesn’t grow on trees. It’s important to teach them they can’t always have what they want.
Money Is Always Earned
Kids need to have money of their own to learn how to make decisions when using it. Moving away from giving your child money could mean moving toward allowing them to earn money. Consider paying them for completing extra tasks around the house, getting good grades, etc. Not only will this reinforce that money is earned, they’ll think twice before spending their hard earned money.
Make Saving A Priority
Saving is an essential money habit that teaches goal setting and planning while building security and independence. Teaching kids to pay by depositing a portion of their earned money into a savings account is a great start to ensuring future financial success. Help get them started by opening up their own youth savings account.
Decisions Always Have Consequences
As parents, it’s natural to want to protect your children. Though you give them your best advice, they may opt for learning things the hard way. If your child wants to spend their money on something they’ll later regret, for example, make it a teachable moment and let them live with the consequences. Talk with your kids and help them understand where they made the mistake and how they can make better choices next time.