Every parent wants to see their children succeed. That's why we try as much as possible to give our children the skills they'll need to thrive. And when it comes to skills, teaching our children good money habits is vital.
But in as much as finance management can be a fascinating topic, how you approach it can determine whether your efforts will bear any meaningful fruits.
Kids aren't asking parents for more money lessons. And many parents tend to erroneously assume that kids love structured, classroom-based lessons. But this strategy can discourage your kids. They may not retain the important information you're sharing.
We don't want you to make the same mistake. So, we've compiled a list of five practical ways to teach your kid about great money habits.
Talk Openly About Money Habits With Kids Present
Many parents think kids are too young to process sensitive money conversations. This is probably why many adults shoo them out of the room when they want to have frank conversations. But this is not wise.
Your children may not understand everything you talk about, but they're more likely to learn a few things about money habits with repetition and age. So feel free to talk about sensitive money matters, like retirement funds and salary negotiations when your kids are around.
Look For Teachable Moments
During elementary school, you're your kids' most important role model. Although this may change during their adolescent years, it pays to make the most of it.
Therefore, look for teachable moments to convey a concept to your kid. For example, when you go shopping, explain to your child why you picked cheaper brands. This will help them understand that it is possible to live within their means.
Set Constraints On Spending
Even if you can afford to spoil your child once in a while, it's important to set constraints on their money habits as early as possible.
As a parent, you're used to saying no to certain matters. Doing the same on parent-aided purchases and cash requests is no different.
Let your kids know how much money they can spend per week or month. This way, they won't be shocked when they hear no. They will also learn that they must save lots of money over time for big purchases.
Use Rewards And Tough Love
Instilling fiscal discipline is not easy. You must be ready to praise and show tough love.
For example, when your kid saves a few dollars for future purchases, praise them. Tell them they're doing the right thing. And to reinforce this virtue, reward them with a low-cost treat, like adding a dollar to their savings or increasing screen time that evening.
Similarly, hold your financial fire when you see your child making the wrong choices. Help them understand that by spending today, they're foregoing future purchases that may be more valuable. The aim here is not to punish them, but to let them see what they're missing.
Involve Them In Grown-Up Financial Choices
As your children get older, it's wise to involve them in grown-up money choices. This will give you a perfect opportunity to walk your kids through major financial transactions that take lots of months of saving and planning.
For instance, get them involved when buying a house. Here, you will have the right moment to illustrate specific money concepts like amortizations, mortgage, and down payments.
As a parent, you have an opportunity to teach your kids the value of money, saving strategies, and instill good spending habits. Regardless of how you do it, always remember it's in your financial interest to help them learn how to manage and grow their own money. This way, they will succeed and become independent financially.
What strategies and tips are you using to teach your kids great financial habits? Do you have more pieces of advice for parents and parents-to-be?