What are some good financial habits for children?
The world of money is becoming a more important part of our children’s lives than ever before. With the economy struggling and so many families feeling the pinch, it can be difficult to encourage your kids to learn the proper financial habits. If you’re worried that your kids might get caught up with debt or lousy budgeting practices, here are a few ideas that can turn your children into savvy savers and disciplined spenders.
1. Lead by example
If you want your children to have a good relationship with money and debt, then you’ll need to set the example they learn from. If you’ve got outstanding debt from credit cards or loans, then make it a priority to become debt-free as quickly as possible. Use something like this payoff calculator to create an actionable plan that not only gets your debt paid off but also helps show your kids that debt is not something that they should be okay with having.
2. Make saving money a game
Gamification is a tactic companies use to make it fun and addictive to use their products or services. It’s an incredibly effective method for establishing loyalty that parents can use, too. Create a game out of saving money that includes milestones, rewards, timelines, and progress charts to get your children excited about putting money away. The more fun you make it now, the more your kids will see saving money as a positive thing, creating a better relationship with money that helps them avoid debt and impulse spending.
3. Create dream boards and talk about how much those dreams can cost
If you want to teach your children the actual cost of the things they want, give them a task that lays out the specifics. Get some poster board and cut out pictures from magazines of things they’d want in life like big houses, beautiful clothing, or other luxuries. Once their “dream boards” are created, spend time together going over how much money it would cost to have these things and how they could achieve earning that money. Doing this activity with your kids will help them conceptualize the value of money and allows them to ask questions and see the tangible way their actions, such as the degrees they get or jobs they take, can help them achieve the life they want to live.
4. Reward them for a job well done
Above all, reward your children for achieving savings or spending goals to help motivate them to keep going. They can either buy something they’ve saved for or do something where money isn’t involved, such as spending time with you or heading to one of their favorite parks or places to hang out.
The bottom line
It can be hard to get our kids to set money aside for the future and become disciplined with debt. We can, however, frame our advice in a way that makes it seem fun or easy to do. Use these four methods as a way to start the conversation with your kid about good financial habits and set them on the track to become financially responsible teens and adults.