It may be tough to admit, but we know we need to make better decisions when it comes to money. Ever wonder how you got to that point? While we, as adults, are responsible for choices we make, good and bad, our basis for making financial decisions often comes from dear old mom and dad. Whether you like it or not, our attitudes and practices in regards to money tend to reflect those of our parents. So consider your children; if you want them to grow up to be financially responsible, you must teach them to be that way. Here are the basics:
- Teach your children about money by example- The best way to teach your children to be financially responsible is to exhibit sound practices in your own lives. Create a budget, pay bills on time and don’t spend money frivolously. And don’t tell your children that you are doing this, show them. Include your kids in the money management process. Let them know that it’s as important a life skill as doing your homework or learning how to tie your shoes.
- Teach children the difference between wants and needs- Children tie money to things (adults unfortunately do the same) so it’s critical to demonstrate to them the difference between wants and needs. This also gives you an opportunity to teach them about saving and how to view their wants as rewards for hard work and saving money. Beware of spoiling children as well. We all love our kids and want them to have everything they desire, but it only hurts kids in the end. One day, you may not be able to or want to give them what they want. The inability to get what they want from you may lead them to rack up debt.
- Teach goal setting- Instead of giving children everything; teach them to set goals for earning it. Children are always going to want something, allow them to work to earn enough allowance to purchase it. This way, they will learn how work equates to earning the stuff that they want. A bonus lesson is that they will likely appreciate it more when they get it.
- Open a savings account- This is an important way to introduce your child to banks, saving money and earning interest. The important part of this is to include them in every aspect of the process, including withdrawing money to purchase items. Let them make this decision, even if they want to buy something they don’t need. Balance that lesson, with a lesson about earning interest for not spending savings.