No pressure, but parents can have a lot to do with how their children handle money when they get older. Teaching your children about money is extremely beneficial to their future. Bonus, teaching your kids about money educates them on much more. For example, when you are teaching your children about finances you are also teaching them patience, generosity, long-term planning, and much more. Here are 5 healthy financial habits to teach your children.
5 Healthy Financial Habits to Teach Your Children
Saving is one of the most important things you can teach your children about money. What are some ways you can teach your children about saving money?
One way is to take your children to a bank. Walk them through the process of you making a deposit, of cash or a check. This gives you the opportunity to explain to them (on a child-level) how the banking system works. Don’t go Wallstreet on them, but have a discussion about how the bank is holding on to your money and storing it just like they are doing with their money in their piggy banks at home. You could take this opportunity to explain why you save money. For example, emergencies or big purchases like money down on a house or vehicle. Emphasize how saving money makes you feel good, secure, and proud.
Another thing you can do is get them a piggy bank as soon as you can, even if you are the only one putting money into it at first. This gets them a good little nest egg going and then they can add to it as they get older. You might even want to get them a savings account when they are born. My grandparents got each of my boys a saving account when they were born. They gave me the information and we all deposit some money here and there when we can. It is slowly growing and gaining interest. Our hopes are that this will eventually help them buy a car or go towards college.
2. Work for the money you are given
Young children should understand the basic understanding of capitalism. People get money in exchange for work. For the most part, money doesn’t just magically appear in your bank account.
**Side note, this is not going to be some political post. I know there are ways to “cheat” the system and programs for people that really do need a little extra help to get back on their feet.
However, I do think it is important to teach your children the value of hard work. To reiterate this, you can talk to them about your or your spouse’s job. You could explain how you got to work each day to earn money to live and do the things you want to do. I recommend giving your children an allowance. However, they have to complete certain chores each week to earn this allowance.
I budget weekly at our house. As soon as your child has a regular “income” coming in then it is time to start discussing budgets. Sit down with your child at the beginning of each month and make a list of all the things they want to purchase for the month. This really depends on the age of your child. The older your child gets the more thorough you should be. For example, if your child is old enough to have a job and a car then you are going to have to make sure they budget for a car payment, gas, upkeep of the car, etc… Even if you help them with the car payment or oil changes, I think you should still discuss budgeting it with them because they will eventually be doing it all on their own.
Teach your children to keep up with receipts or at least remember to write down what they spend each day. That way they can see exactly how much they are spending and for what.
When I was younger, about 13 or 14, I had my first job working at an old-fashioned soda shop. My parents got me my own saving and checking account. This was huge for me and greatly impacted how I look at money today. My mom helped me keep up with and balance my checkbook. I even bought my school clothes each year. It was hugely beneficial for me to see money coming in and money going out. It really shaped my way of thinking and made me think twice before buying.
4. Want vs. Need
Creating budgets lead right into my next tip. Teach your children the difference between a want and a need. Start working with your children’s impulse control when they are young. Keep reminding them of it, maybe even when they are out of the house and newly on their own. A lot of adults still struggle with immediate gratification.
You can teach this by discussing with your children each time they point out something that they want. Discuss with them how you shouldn’t always buy something as soon as you see it, but should go home and think about it. Do they have the extra money to spend? Or would taking that money and putting it on something else be a better choice? For example, this might be a $20 toy, however, what if they take that $20 and instead of buying the toy put it towards a bigger purchase that they want like a new Nintendo Switch game?
You can also teach this lesson by leading by example. Discuss with them on why you make a purchase or why you don’t make a purchase.
5. Be aware of advertising
Advertising is everywhere in the world we live in today. It is always telling us what we “need” in our lives. The fact is a lot of it is geared towards our young, impressionable children. Teach them that most of the advertising isn’t real and a lot of it is trying to sell us things that we don’t even really need.
In closing, I hope you have found these 5 healthy financial habits to teach your children to be beneficial. At the very least, I hope this post has gotten you thinking about the importance of preparing your child for when they are on their own and making their own financial decisions. If you are wanting to read more about teaching your children about money, you can find some great advice here from Dave Ramsey. Do you have any tips for how you teach your children about money? I would love to read about them in the comments.
“But those who hope in the LORD will renew their strength. They will soar on wings like eagles; they will run and not grow weary, they will walk and not be faint.” Isaiah 40:31