Teaching Your Kids Smart Personal Finance Habits
Here's how you can teach your kids smart personal finance habits that last a lifetime
Here are 10 tips to teach your kids good personal finance habits that last a lifetime.
1. Set a good example.
You may not know it, but your kids are watching you and learning from you how to handle money. They may not always pay attention to what you say, but they're paying attention to what you do. Even if you make a money mistake from time to time, you and your kids can learn from it if you own up to it and learn from it.
2. Stress the importance of savings.
Teach your kids to "pay themselves first;" in other words, make savings part of spending. One plan is to have your kids save toward an easy-to reach goal, like a bike, special toy, or vacation. Also, introduce your kids to the magic of compound interest. The magic of compound interest goes like this: A little bit of money + a lot of time = a lot of money.
3. Stress the importance of spending smart.
Also, teach your kids about smart spending. For example, when you go grocery shopping, explain to your kids how to comparison shop, how coupons work, and how making a list and following it keeps you from going over your budget.
4. Remember the importance of giving back.
Make it a priority for your kids to think about those less fortunate. For example, for every new toy your kids buy or receive as gifts, have them donate a toy.
5. Keep it simple and make it fun.
No matter how old you are, "budgeting" can seem like a chore, or at the very least, not fun. Don't push your kids to do or know anything that they're not ready for.
6. Let your kids make mistakes.
You may be upset about your kids' money mistakes, like spending all of their allowance, but sometimes making a mistake is the best way to learn. When your kids make a money mistake, focus on what they can do better next time.
7. Tell your kids how to get a winning credit score.
An important score in the game of life is your credit score. Although your kids may not be old enough to apply for a loan or credit card, it's never too early to teach your kids about the basics of using credit responsibly, such as not borrowing more than you can afford to pay back, paying back what you do borrow, and knowing how and where to get help with payment difficulties.
8. Put your kids in the loop.
While you don't need to let your kids in on all the details of your family's finances, it's a good idea to explain the basics of your family's finances, such as the basic expenses in running a home, where the money comes from, and where the money goes.
9. Put your kids to work.
Your kids need to know that there's no such thing as a free lunch. Some experts think that your kids' allowance should be tied to doing chores; others think that you should pay your kids for "extra" chores, like washing the car or raking leaves. Whatever you choose to do, it's important to make a connection between work and pay. You can also have your kids pay for more of their own "stuff" as time goes on.
10. Put things in perspective.
Teach your kids that the best things in life…aren't things. While money is important, there are things more important.
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These are general recommendations not applicable to all financial situations. Every financial situation is unique. Further, the suggestions and recommendations contained within the content provided are not an assurance of any future result. Be sure to discuss your specific financial circumstances with a legal or financial expert before you take action. Contact us for more information.
