With limited exceptions, parents want their children to be more successful than they are. We try to teach them not to make the same mistakes we did. That should include financial behaviors. If you’re a parent, you look for ways to improve your personal finances. Children need to learn that too. Here are six ways you can help them:
1. Start financial education early at home
Sitting at your kitchen table paying bills is not a time to tell your children you’re too busy for them. It’s a teachable moment. Get into the habit of including and explaining to them what you’re doing and why. They may not fully understand it at a young age, but it helps lay the foundation you’ll need to teach them more advanced finance as they get older.
2. Teach your children how to save money
Piggy banks seem old-fashioned in an era where change is rarely used. They’re still a useful tool for teaching children how to save. As they get older, show them how to use spare change apps on their phone and explain what interest rates are and how they can help grow a savings account. Show them the rewards you’ve gotten from saving for major purchases.
3. Don’t give your kids money for nothing
Teaching that money needs to be earned is one of the most valuable lessons your children can learn. Don’t just give them money without expecting something in return. Create situations where they can earn money, like yard work, painting, or cleaning out the attic. Some parents put together a weekly chore list and give an allowance when those chores are done.
4. Show them how to shop with a budget
Make a small grocery list and take your child shopping. Explain that you only have a certain amount of money to spend, so you’ll need to check prices as you go. This is an interactive exercise that kids can get excited about. Making them part of this “adult” process gives them a sense of responsibility and instills good spending behaviors they’ll need later in life.
Economists have proven that giving to those less fortunate can make us more financially successful. Call it karma if you like. It’s a good habit to pass on to children because it teaches them that life is not all about them. This instills a sense of goodwill that will make them better people. Find ways to give and show them the results.
6. Show your children what they won’t learn in school
Sadly, most schools don’t teach basic finance. By the time they get to high school, your children should know about checking and savings accounts, credit cards, interest rates, and basic investing. Teach them how money works and explain what the stock market is and why it’s important. If you don’t know, take a class. This knowledge will benefit you too.
The Bottom Line: Children emulate what they see
Don’t let someone else teach your children about money. Children emulate what they see, and they see you more often than anyone else. Include them when you do your finances. Show them how to open a bank account, use a credit card, and budget their money. Learning all these things early will make them more successful as they grow older.