How to Teach Your Kids Good Money Habits4 min read
As a parent, you definitely know how things can get out of control if you’re not financially disciplined. Financial discipline is among the key pillars to a successful life, which is definitely something any parent would wish for their kids.
With this in mind, read on as this article unravels some helpful tips on how to teach your kids good money habits.
Introduction to Money: Start Early
To mold good money habits in them, it’s good to introduce your kids to basic money concepts as early as possible, preferably as soon as they are old enough to understand them. Start by teaching basic concepts like what money is used for and the difference between coins and bills.
However, you’ll want to keep coins and cash away from toddlers because it’s unhygienic and unsafe. The last thing you want is an emergency trip to the ER because your son or daughter swallowed a coil or contracted diarrhea after chewing some dollar bills.
Introduce Them to New Money Concepts As They Grow Older
Earning and Saving:
At kindergarten and preschool, your kids will probably know how to count money. Elementary school is a great time to introduce your young ones to saving and earning money.
Charity and Giving:
In sixth grade, some kids wish to become entrepreneurs, whereas others would rather become engineers, doctors, or accountants. Either way, they all need money management skills. It’s also the best time to introduce your kids to charity, the importance of giving back to the community, and how to do it in a way that works for them.
Bank Accounts, Loans, and Plastic Money:
By high school, it’s important to help your kids learn about bank accounts, checks, and credit cards. Make sure to explain the importance of having good credit and how to use credit responsibly.
Introducing Your Kids to Credit Cards:
As much as it might sound counterproductive, introducing your kids to credit cards and debit cards can be a great way to help them learn how to manage their finances responsibly.
It gives you a chance to put them to the test to see if they can make sound decisions about money on their own. And especially if you get one with cash-back rewards and zero annual fees, like SoFi Credit Card, you’ll also have a way to reward your kids when they make smart financial decisions.
Create Budgets and Shopping Lists Together
As you already know, budgeting is a crucial element of financial success. This is something your kids should start learning from as early as 6th grade if not earlier. Instead of using technical terms to explain what a budget is all about, consider involving your kids when making a weekly or monthly budget.
You can start slowly— perhaps by making a shopping list together over the weekend, comparing the costs with the money you have available, and discussing how to allocate it. While at it, make sure to point out the various benefits of budgeting, including how it helps avoid impulse buying and unnecessary expenses. Eventually, you can even let them do budgets on their own.
Cultivate a Saving Culture
Piggy banks have always been a go-to approach when teaching kids to save. Saving jars are even better because it allows your kid to visualize the money growing. Before you get started, however, make sure to help your kid understand the importance of saving money.
You can even do it together practically, perhaps when they ask you for a new video game console, a trip to Disney, or pretty much anything you could use as a purpose for saving. Over time, make sure they know how important it is to save for a rainy day.
Set a Good Example
In many cases, kids emulate their parent’s behaviors. They learn better from examples. So, one of the best ways to instill good money habits in kids is leading by example – by handling money responsibly, and spending wisely.
Kids are very keen to notice the little things that parents hardly care to keep track of. If you’re always extravagant at the mall, constantly fall behind on major expenses, or have frequent money arguments with your spouse, it’s just about time you made a U-turn.
With the above few tips in mind, it shouldn’t be so hard to cultivate financial discipline and good money habits in your kids.