One of the best things you can do for your children is teach them smart money management techniques from as young an age as possible. Most kids (either consciously or unconsciously) learn their own money habits from observing their parents, which is why it’s vitally important to set a good example for them. Here are some tips to help you teach your kids to be money smart.
Practice What You Preach
If you want your child to respect what you have to say about smart money management, then you need to show them that you’re serious and you know what you’re talking about. That doesn’t mean you need to have next to no debt and a thriving savings account in order to be taken seriously, but it does mean that you need to be as transparent and honest as possible.
If you’re currently struggling with debt (be it credit card debt, student loans, making your mortgage payments etc.), don’t be afraid to sit down with your child and talk about it. We’re not suggesting you break down all the nitty gritty details, but use your own situation as an opportunity to contextualize your money lessons.
Say, for instance, you’re struggling to pay off debt that was accumulated when you or your partner was out of work. Use that as part of your lesson on the importance of having an emergency fund. You have the opportunity to show your child, through real world personal examples, what the consequences of certain situations can be.
How much about your own situation you do choose to share with your child is up to you, but kids are far smarter and more intuitive than a lot of people give them credit for. Don’t underestimate their ability to empathize with you and learn from your own past experiences.
Make Learning about Money as Unintimidating as Possible
As unlikely as this may sound, there are actually ways to make learning about money, dare we say, fun. Make learning as interactive as possible. Present hypothetical situations involving various money issues and help them brainstorm possible solutions.
Find books, TV shows, and movies that help elaborate on your points and teach them about developing good money management from a more objective perspective. You can find books written especially for children that talk about saving money and how banking works. Depending on how old your child is, you might even consider showing them documentaries on credit card debt and bankruptcy.
Set Your Child Up with a Savings Account and Teach Them how to Budget
Lastly, give your child the opportunity to put your lessons into practice and go with them to the bank to open their own savings account. Get them used to the idea of saving money by depositing part of their allowance directly into their bank account and giving them the opportunity to show you how much of it they can save rather than spend.
If they have a job (paper route, babysitting, dog walking etc), encourage them to put at least some of their income directly into their savings account. It’s much easier to maintain good money habits as an adult if you’ve been practicing them since you were a child.