Young people need solid financial guidance so they learn how to make smart decisions with their money. The earlier the parents can start the better it is. Be a positive financial role model for your children, displaying the practices and values that you hope they will adopt for themselves. Instead of enabling bad habits and giving in to their every desire, set boundaries and teach them the importance of working for the things that they want.
5 valuable tips to be a good financial role model to your kids:
Follow these tips to model a motivated attitude towards your own finances in front of kids so that they grow up to be financially savvy adults:
- Be open about the topic of money and your finances:
- Start teaching kids about money at a young age:
- Emphasize the importance of earning money:
- Make smart choices with your money and discuss them with your kids:
- Seek out valuable resources for teaching your kids:
Take an objective perspective when it comes to talking to kids about money. It would be wonderful if everyone had access to the best things in life all the time but the reality is that most people work hard to provide both necessities and luxuries for their families. Avoid the urge to sugarcoat the truth or to steer clear of the topic altogether. Money should be a topic that the whole family can discuss comfortably.
Show smart financial tactics.
Don’t be afraid to broach larger financial topics as well, such as the economic status of the country and how you manage the ebb and flow of your money throughout the year. For example, if one parent teaches piano lessons and makes less money with those lessons during the summer, talk about how you budget appropriately so that you have enough saved to make it through these months without any financial issues.
Never argue about financial issues.
Whenever possible, avoid arguing about finances with your spouse in front of your children. Inevitably you will have disagreements about money but it is important for your kids to see how you work through these disparities peacefully and constructively without yelling or resorting to childish behavior such as name calling.
As kids reach preschool age, introduce them to money, letting them touch, count, sort and play with coins and dollars. As they get older, they can learn how to add and subtract money to create different amounts. It is important for children to understand the concept of money from both a physical as well as an abstract standpoint. If kids have only seen you pay for groceries with a debit card or pay the cell phone bill online, they may not have any idea what this means. Giving them the opportunity to interact with physical money makes abstract interactions with money more real.
Setting up a chore schedule and implementing a weekly allowance is a good place to start. From an early age, kids should have access to the money they have earned themselves and choose to spend as they please. As children get older, consider other ways they can earn their own money so that they do not simply equate cleaning their rooms as a way to get a few extra spending dollars.
For example, they may be able to babysit for neighborhood children or help out elderly family friends with tasks like shoveling the driveway or mowing the grass.
Many kids pick up poor financial habits from their parents. Watching Mom buy expensive clothing when she can barely afford to pay for groceries or watching Dad justify a trip that simply isn’t in the budget this year, while both kids needed braces, sets a bad precedent.
Discuss your financial goals.
Think about setting financial goals as a family and pay attention to your words and actions during your discussions about these goals.
For example, if your children have been pushing to take a trip to Disney World and you don’t have the savings for it, avoid saying something like, “We can’t because you kids are so expensive.” Instead take a positive, collaborative approach to the problem by beginning the discussion with a statement like, “We don’t have money in the bank for a big trip right now but maybe we can think of some ways to save up enough for a trip next year.”
Teaching kids about money is not something that you have to do on your own. In addition to being a strong financial role model, seek out other individuals in your kids’ lives who can provide positive examples. Look for resources at banks and credit unions that also place a high priority on the financial literacy of the next generation. They may offer products and services, as well as financial education, such as classes and workshops.