It’s perfectly natural to want to protect your children from the harsh realities of life. But doing so can inadvertently set them up for failure, especially when it comes to finance. Teaching your kids early about the complex and challenging topic of money is the only way to help them create a solid financial future. Here are four things you can do to get started.
- Involve your children in the household spending decisions. While you don’t want to overburden your children with any difficult financial struggles you may be facing, it’s still important to involve them (to a limited extent) in household finances. Doing so can help them understand the finite nature of a budget, allow them to better respect the things you use money to buy, and will help them learn not to be spendthrifts when they grow up. There are many simple ways you can do this, including having them:
- clip coupons with you
- create the grocery list with you, allowing them to help make decisions about what to add based on your budget, coupons, needs and local sales
- help make big spending decisions, like: should you go out to dinner once a week or save that money for a fun vacation?
- Get your kids in the habit of saving early. Children should be taught from very early on that a portion of all income, including birthday present and holiday present income, should be set aside. Have them put at least 10 percent in a piggy bank or a savings account at your local bank. Using a jar is also effective because it allows them to actually see the money filling the jar over time.
- Be a good example. Kids don’t just learn the lessons you tell them to learn. They also pick things up by watching your behavior. If you’re irresponsible with money, you never save anything, and you don’t budget, then those are the traits your children are likely to mimic.
- Give them an allowance. A weekly allowance is the first source of regular income that children have. The way you teach them to treat their allowance has a big impact on the way they treat all future income. By giving them an allowance you can help them get into the habit of saving for both the long term and short term and help them start to understand the fundamentals of budgeting.
It’s not always easy to teach important financial lessons to young children, but if you stick with the basics, have a lot of patience, and focus on practical lessons, you can give your children the financial know-how they need to have a bright future. If you have questions about the best ways to teach your kids about finance, let us know!