With unemployment rates still high, and with the sluggish economy, it’s all too easy for adults to find themselves in financial trouble. Often, however, it’s those who learned tough financial lessons early on who fare better. That’s why it is vital for parents to impart good financial habits and values to their children, even if these lessons are reinforced at school. Below are five tips on raising financially savvy kids.
Start the Financial Dialogue Early
No matter how young your children are, it’s not too soon to start talking about finances. Start by explaining why you go to work every day: you have to make money to pay for the things they use every day. Piggy banks are a great way to teach children about saving, or you can open bank accounts in their names. Young kids don’t really understand planning for the distant future, but if they grow up knowing how to save money, they’re off to a good start.
Encourage Kids to go on Family Shopping Trips
Rather than sounding like a parrot that only knows the word “no,” let your kids take part in shopping for the family. It’s the perfect way for them to learn how much everyday items cost and to begin learning how to shop wisely. If you want to raise money-smart kids, you have to give them some degree of flexibility; if they get an allowance, they should be able to spend (or save) it however they choose.
Don’t Come to the Rescue
Every kid makes mistakes, but parents must allow the mistakes to teach a valuable lesson. For instance, if a child saves for a significant purchase but comes up short, don’t swoop in and make up the difference—make them wait or make them work for the money. It’s much easier to learn about money management when they’re young and only making $5 a week, rather than when they’re all grown up and making $500 a week.
Set a Good Example
Rules and money lessons won’t work if you don’t model good behaviors for your children. Show them that you’re saving money, that you shop carefully, and that you’re delaying your “wants” until you can afford them. Not only should you use good money habits, you should show your kids how these habits work every day. Taking the time to teach your kids about money now can help them avoid financial pitfalls later.
If you want any more advice, consider consulting with professional financial advisers, such as those at Vahanian & Associates Financial Planning Inc, for more information on finances to ensure that you are a good example of financial solvency for your children.