As parents, we hope to do a good job in raising our children—teaching them right from wrong, instilling in them the desire to learn, and demonstrating how to manage money responsibly. Here are a few things parents can do to teach their kids sound financial habits that will last them a lifetime.
When you use an ATM, explain that it’s not free money. Explain to them that it’s money that has been earned and saved by you.
For example, build in dedicated percentages they must set aside for savings, charity and investments; then involve them in choosing how the money is spent. When your kids constantly break or lose expensive items or run through their allowance early, don’t repeatedly bail them out with no consequences. There are saving banks you can buy that divide out saving options.
If money is tight and you have to deny your kids non-necessary items, give up something of your own that they know you’ll miss. Remember actions are heard more than words.
Discuss and explain to your children that if you don’t pay off your credit balance every month, the interest assessed on your account means you may be paying much more than you expect for the items you purchase.
Open a 529 Qualified State Tuition Plan or a Coverdell Education Savings Account to start saving for your children’s education. Let them know about it well before you start discussing college choices.
Starting educating them early on financial literacy will only set them up for success.