We all want our children to be successful in life, right? It’s natural for parents to continue supporting their children financially well into adulthood. But then, while supporting your kids financially can offer a lifeline in the short term, it may be a detriment over the long run. Teaching them money management skills is the best way to help. You see, unlike two or three generations ago, life after college can be tough because of the sky-high home prices, rent, and sometimes, the uncertainty of finding a job. How do you teach your children about personal finance when sometimes, you’re not sure yourself? Here are some essential things you should teach your children. Who knows, you may learn a thing or two in the process.
Begin with an allowance
For children to become financially independent, they need to respect money and its value. While most parents give their children an allowance because it’s the norm, try to help them realize how valuable money is, and that it doesn’t come by easily. You can do this by assigning chores to the kids and giving them an allowance to appreciate their effort. Not only does this build work ethic in them, but it also helps them feel like they have earned money, which gives them a sense of pride. This way, they know that without working, there’s no money.
Teach them how to budget
Helping your kids spend money the right way is important. Teach them how to budget their money from an early age. For instance, you can give the kids some pocket money. Let them know that the pocket money will only be replenished after a certain period. Explain to them that they can either spend or save the sum at will, and be sure to tell them the consequences of each. You can show them things about planning and live within their means. As a parent, you might be tempted to intervene when they use up what you gave them. Remain adamant and wait. It will build character
Have the teenagers get jobs
It’s never too late to teach kids about money. In their teenage years, they understand a lot more and can, therefore, do a lot more. Since their expenses and allowances get bigger as they grow, you can now get them to look for a job. Encourage them to look for something they like doing so that even when they are at work, they can still enjoy themselves. They can work after school and even during the summer. Although these jobs might not be very well-paying, they will go a long way to helping your child understand that working is the only means to secure their future. If you don’t think they are properly motivated, you can show them what comes of people who work hard. Magazines such as Westlake Malibu Lifestyle feature successful people and what their lives look like. Reading their stories provide valuable life lessons. Help them understand that without hard work, there’s no growth.
Teach them about credit
The concept of credit to many young ones is a foreign one. For your kids to grow up to be financially independent, they have to learn about credit, how it works, and why you must have good credit moving forward. Once a parent feels the child is responsible enough, they can add the child as an authorized user onto the parent’s account. At this point, they can get their cards with their names on it, but linked to the parent’s main account. To teach the child about the card, you can allow them to make some small purchases, which the parents can deduct later from the child’s allowance or savings. This will help them tame their spending and learn about how credit cards work.
Living within your means
Children are often like a sponge; they soak up what’s around them. Children watch us more than most people think. They emulate us in a lot of ways, more so behaviorally. Because of that, the kids also need to see a good role model when it comes to financial matters. This means not purchasing things you don’t need. As a parent, you need to show them what smart purchasing is all about. The point here about personal finance is it can be better taught when you’re practising what you preach.
Talk about it
When the kids are old enough, incorporate finances into the conversations. While some parents might think their kids already know about financial management, ensure that you refresh their memories now and then. When it comes to matters regarding money, let them know what you expect from them as a parent. Being clear and concise helps to prevent confusion and misunderstandings. Here, you can talk about things like college, expenses, and so on. Will you help them out with tuition in college? What about their daily expenses? Will they live with you once they are 18, and if yes, will there be any rent imposed? Are you open to co-signing on a vehicle payment or general loan? Have clear, sober conversations, not lectures. It’s important the child feels that you’re talking to them, not at them.
Teach them about saving
Children will want a lot of things as they grow up. They’ll want a new toy here and there to keep up with their peers, among other reasons. When kids ask their parents for something, and they give it to them every time, they develop an entitlement problem. They think that the world owes them something, an attitude that can cause significant problems later on in life. Teaching the kids culture of saving will help them appreciate that things don’t come as easily. If they are speaking of getting a new phone or even owning a car, help them understand that you can support them, but they will have to contribute the larger part. As the kids save for whatever they want, they get to learn that saving is crucial and an integral part of financial independence.
Utilizing the above strategies will help you raise children that are more financially aware and are ready to take on the world! This way, you’re making it easier for them to go out there and be the best they can be!
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Founder Dinis Guarda
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