The Secrets of Teaching Your Child Good Financial Habits
In today’s fast pace society children have to grow up so fast. The best gift you can give your children is to prepare them for this fast paced society that they are about to enter and will be in for a very long time.
Yes teaching your children reading, writing and arithmetic is the right thing to do; but also give them an “edge up” by teaching them good financial habits. As a parent you know that any advantages that you can teach them in their early years will greatly benefit them in the long run.
By learning good financial habits about saving, spending and investing they will be way ahead of their peers. And getting ahead is what you want for your children, isn’t it? Let’s review some financial habits that will last your children a life time.
Good Financial Habits:
Teach your children good saving habits:
- Allowances – have them save 1/2 of their allowance money.
- Birthday gifts – make them save 1/2 of any monetary gift they receive.
- Even if they have nothing to save the money for, get them in the habit of just always saving 1/2.
- Part-time jobs – when they are old enough to have a part-time job, have them automatically save 1/2 of that money.
- By developing the habit of always saving 1/2 they will learn to live on less and save more.
Teach your children how to spend properly:
- Watch your own spending habits.
- Children copy your habits – if they see you over spending they think it’s okay.
- Teach them the difference between wants and needs; even at a very young age.
- Have them understand that just because they want something doesn’t necessarily mean that they need it.
- Teach them to buy based on need not want.
- This is teaching them to spend responsibly.
- Do not buy them everything they ask for; even when they beg you for it.
- Do not buy them whatever they grab while standing in the grocery aisle. Most of the time they don’t really want it they’re just grabbing it to entertain themselves. And they definitely don’t need it.
Teach your children how to invest:
- Teach your children the value of investing.
- Show them the benefits they receive from putting money into an investment account.
- Have them learn about the value of compounding; how their money will grow over time from the interest.
- When they are old enough to have part-time jobs, have them open an IRA investment.
- Have them start to save money for their college education.
The best approach to teaching your children good financial habits is the same as teaching them any other habits – lead by example.Your children want to copy you. Children do not know the difference between a good habit and a bad habit, so your examples are crucial in their development.
Your children learn from you by copying your behaviors. It stands to reason that they also learn from your habits. If you have strong financial habits they will too; but they can just as easily copy weak financial habits.
Maybe by teaching your children these financial habits, you will learn some new habits also; a good teacher learns from their students.
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