Ever wondered how you raise your children to be financially responsible and independent? The answer may not be endless lectures and lessons on Google. Children learn from the examples that their parents set. That means that the more you expose your children to information about cash and how you spend, the more they’ll learn from your behavior.
Although it’s tempting to shield your children from complicated things like debts, and budgeting for as long as possible, the truth is that the sooner they start learning, the better off they’ll be in the long term. While 71% of parents say that they are reluctant to discuss finances with their kids, the truth is that ignoring money means that your kids may feel uncomfortable coming to you to ask questions.
Here’s how you can boost your chances of raising financially savvy children.
- Make Budgeting a Family Activity
The first and most important way to bring your kids into the financial conversation is to invite them to join you for the monthly budget conversation. You don’t necessarily need to get into the loans and interest rates part of things with them, but you can show them how much money you have coming in each month, and how much you have going out, so that they can see how everything adds up.
Make talking about cash an everyday occurrence for your family and encourage your youngsters to get involved in looking for ways to save money if possible. For instance, show them how paying less for a store-brand box of cereal means that you have money left over to buy them a treat at the end of the month.
- Avoid Impulse Spending
We all wish we could give our children everything. Unfortunately, telling your children that you’re going shopping for groceries one day, and then buying them a treat at the counter could mean that they struggle to understand why you can’t do the same every time you go shopping. Impulse spending is fun to begin with, but it’s better to show your children that you need to plan your spending.
For instance, let them know that they can have a candy bar when you’ve finished shopping if together, you can find a way to reduce your bill by around $3. That way, you can take looking for a bargain and make it into a game.
- Don’t Reveal Everything Too Fast
While it’s important to give your children plenty of information that they can use to better understand money, try not to overwhelm them with too much data too fast. Your kids don’t need to know that you have different savings accounts for different cash, or that you owe certain money to specific loans. Instead, introduce them to the basic things at first.
For instance, you can tell them how much money you have each week, after you’ve put cash in your savings and paid your debts, then show them how that money gets broken up into bills, money for food, and other expenses.
- Show Them Why Credit Cards a Bad Idea
Ideally, you should avoid using credit cads in front of younger children who can’t understand why you can’t simply use the same piece of card to “buy” anything that you want. However, as your kids get a little older, you might decide to teach them how credit cards work, and why it’s important that they don’t use them too often. For instance, show them how much an item costs when you buy it on a credit card, then show them how much it adds up to later when you add the interest payments on.
This is a good introduction to the way that interest works, and it will help your kids to see that sometimes instant gratification isn’t a good idea if it means that they have to give up on other things later.
- Help your Kids Learn from your Mistakes
Finally, when your children are old enough to take on some responsibility, give them a weekly or monthly allowance and let them know that they can spend it how they choose. However, if that child decides to spend all of their money straight away on candy, then they decide that they want a game instead, don’t just give them extra cash. Let them know that they’ll have to start saving again the next time they get their allowance.
It may be difficult at first to say no to your children, but it’s important if you want them to start understanding the true value of money. The more you say no to them, the more they’ll understand that they have to be patient to get what they want sometimes.