Teaching Your Kids Solid Money Habits


While you’re working on building and maintaining your own financial house, make sure you don’t forget to help your children lay the framework for a stable financial future. Financial habits are much easier to maintain when you start early and understand why they’re good habits in the first place, which is preferable to a period of trial and error. Here are a few tips to help your kids help themselves to a bright financial future.

Model Proper Financial Behavior

Before you can start teaching your children good spending and saving habits, you’ve got to make sure you know and practice them yourself. You never know when your kids might be paying attention when you pay your bills, ask your agent about saving money on local insurance, make a budget, spend at the grocery store or anything else that has to do with money. Make it so that your kids see you being responsible with your funds. While they might not know exactly what’s going on, you never know what kind of impact what they see will have on them.

Teach Your Kids How to Save

Kids are likely used to spending their allowance or birthday/holiday money as soon as they get it. Teach them it’s more than okay to save their money. You can do this by giving them three piggy banks; one for spending, another for saving and the third for sharing. Try to get your kids into the habit of saving some of the money they receive before spending it, and it’s also a good idea to teach them to give to those who are less fortunate or a charitable organization.

Let Your Children Earn Their Allowance

Rather than simply give your kids an allowance, teach them they’re rewarded for good work by having them do chores beforehand. This will get your child into the habit of (hopefully) completing chores before asking for an allowance, which better prepares them for the real world. Your boss will likely laugh at you if you were to ask for your paycheck before you’ve put in any actual work to earn that paycheck.

Don’t Be Afraid to Let Your Children Make Financial Mistakes

Just like you, sometimes your kids have to mess up before they smarten up. You might not agree with everything your children want to buy with the allowance they earn, but it’s their money, which means it’s their choice. Let your child buy something she or he might not play with or use much, or something of poor quality that won’t last long. When they witness the results of a bad buy, they’re sure to think twice next time. Learning such lessons when you’re younger is much better than making them when you’re older and have access to more money, which can result in bigger regrets.

The Importance of Budgeting

Budgeting is something else you can teach your kids. Just as there are some purchases you’ll have to save up for, the same is likely true of some of the more expensive buys your kids want, like a bike. Teach your kids that sometimes they’ll have to make sacrifices if they want to save up enough money to buy bigger ticket items. While you’re at it, now is also a good time to teach your child how to separate needs from wants, which also goes a long way in saving up faster.

Proper Borrowing Habits

There might be times when your kids come to you hoping to get an advance on their allowance, essentially a loan. This is a good opportunity to teach your kids about interest, the proper way to borrow and the importance of paying back loans ASAP.

While there’s no guarantee your child will maintain the financial lessons you offer, you can at least do your part in providing her or him with a few solid lessons. You’re both sure to thank yourselves in the years ahead.