As a parent, you can teach your children important financial lessons – and you should.
Because financial skills are key to successfully navigating through life, it’s never too early to begin teaching your children about money. Studies have shown that many of our habits – especially financial habits – are formed by the age of seven. Children as young as age three can begin to grasp the most basic financial concepts like saving and spending.
We asked our friends on social media for some of their ideas and experiences when it comes to teaching children smart financial practices, and received the following responses:
“Don’t spend more than you make. Only use credit for necessary items. Pay off fast.”
“Set 10-percent aside. Live on less than you make. Help your kids understand this principle by getting a dollar, breaking it into 10 dimes, and having them set one aside. It helps when kids get to be the one to set that dime aside instead of never seeing it.”
“I am super open with our finances with my kids. I had to learn how to be responsible on my own, at a very young age. I want my kids to know how to be financially fit for life!”
“I wish someone had shown me how to budget. My mom would only sit down with me and show my current expenses vs my current income and then end it at that. I realize now that’s only half the work!”
Parents are the number one influence on their children’s financial habits and behaviors. Because of this, it’s important that you consistently practice safe and sound financial habits, and communicate those habits to your children.
One way to ensure you are instilling strong financial habits in your children is to develop a checklist of financial principles you want to discuss with your children from a young age. Understand that these principles can lay the foundation for your children’s core behaviors and affect their financial decisions for the rest of their lives.
The following is some basic and universal financial advice that you can discuss with your children to help lay a positive and strong financial foundation:
- If you don’t have the money for it, don’t buy it.
- Sometimes you have to wait for something you really want.
- The sooner you save, the faster your money can grow from compound interest.
- Don’t spend it as soon as you get it.
- Keep track of where your money is going.
- Be charitable.
Beth Kobliner, author of New York Times bestseller Get a Financial Life, had the following to say in regards to parents’ responsibilities to teach children financially-sound habits.
“Look at the mortgage crisis and how many families lost their homes — 3.9 million foreclosures. Look at the amount of money — $1.1 trillion—we owe in student loan debt. The amount — $845 billion — we owe in credit card debt. To help the next generation avoid the mistakes of their elders, and to live financially fit lives, they need to be taught the essentials about money.”
By demonstrating healthy financial values and behaviors and including your children in everyday financial decisions, you can lay a strong foundation for your children’s financial futures.
How do you ensure your children are absorbing positive financial habits? We love hearing your ideas!