Start with the fundamentals below, make time for dialogues, and lead by example as they begin to practice money management themselves. With proper guidance and opportunities to put lessons into practice, 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 are 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.
At an early age, we want youth to understand our money should have purpose. Encourage your kids to have accounts/jars/envelopes for different situations. This may include saving, sharing, spending, and investing for long term goals. Sticking to a budget takes practice and discipline, so it’s best to start now.
Parents aren’t a bank.
You may have already established the fact that money doesn’t grow on trees. This concept, however, may not be clear if anytime they desire something money is available for the taking. If you really want this lesson to be understood, it may be time to say no to the pleas and close that wallet of yours.
Money is always earned.
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 when spending their hard earned money.
Pay yourself first.
Of all the expenses they will one day have, paying themselves first will always be the most important. What does this mean? It means treating yourself like an expense and putting money into savings first. In doing so, they will ensure they are contributing to their goals. What a valuable habit to establish.
Decisions always have consequences.
As parents, it’s in our nature to want to protect our children. Though we give them our best advice, they may opt for learning things the hard way. If you’re 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.