Parents pass down a variety of things to their kids; some of them by nature, and others by nurture. However, when it comes to financial health and wellness, all parents — regardless of whether they have a family net worth valued in the millions or thousands — should make it a top priority to ensure that their kids understand, embrace, and adopt the following three essential pieces of advice:
1. Saving is Spending — On Yourself
Some kids think that saving is pointless (I believe the proper technical phrase is “like, so lame and unfair”) because it seems like a deprivation. On the other hand, buying something like a new video game or gadget seems fun and exciting.
However, the truth that parents need to convey to their kids is that saving isn’t about denying themselves: on the contrary, it is about choosing to spend on themselves, and in doing so, increasing their financial strength and options. And there’s like nothing like lame and like, unfair about it. Like, seriously.
2. Setting a Purchase Goal is Satisfying and Smart
Kids that diligently set aside their allowance (more on this in a moment) and other financial gifts to ultimately spend their money on something worthwhile and meaningful will be light years ahead of kids who get into the habit of aimless, impulse buying. Plus, not only is this a good habit to cultivate, it will also prove more satisfying than a less substantial purchase.
3. Allowances Should be Earned — not Assumed
Decades ago, allowances emerged as a way to reward kids for good behavior — which typically included adequately performing a variety of chores; everything from raking leaves, to washing the car. However, these days plenty of kids safely assume that the proverbial allowance check is in the mail, and the only qualification to get it is to, well, exist.
Parents need to hit the reset button and turn allowance into something that kids need to earn. Obviously, this isn’t because parents want to avail themselves of cheap domestic labor. It’s all about the bigger picture: kids who understand the link between personal effort and financial reward will go much, much further in their careers than those who incorrectly believe that life is a trip down easy street, and all they have to do is read the window lettering to see which store is giving away freebies.
The Bottom Line
It goes without saying that the financial world that today’s kids will eventually emerge into — and take over — will look very different than the one day. Heck, even Aunt Erma will trade in the envelope with cash for Apple Pay. But the fundamentals remain, and the above advice is as true and useful today as it ever was. Maybe even more!