Children pick up on everything when they’re young, presenting an ideal chance to teach them about financial savvy. Otherwise, a lack of good money habits could make them struggle with financial decisions later on. Here are 10 essential smart money habits you should share with your children.
The Difference Between Wants and Needs
Being surrounded by temptations almost all the time makes distinguishing between needs and wants more important than ever. Help your children understand this difference by making it a part of daily decisions.
Whether it’s choosing between a new toy or saving for a much-awaited family outing, these decisions teach prioritization and delayed gratification, critical components of financial wisdom.
Teach them How to Invest
The concept of making money grow through investments can be intriguing and exciting for children. Introduce them to simple concepts of investing by showing how savings can grow over time in a bank account or through other investment vehicles suitable for their age.
This could be as simple as a piggy bank for younger children or opening a savings account for older ones. As they grow, involve them in discussions about stocks, bonds, or any investments you’re considering.
Let Your Kids Work
Allowing children to take on work within their capacity is a powerful way to instill a sense of responsibility and accomplishment. By establishing tasks or projects that align with your family’s needs, and attaching a “salary” to these tasks, children get a hands-on experience with earning.
This setup is perfect for teaching about saving, spending, and investing in a very practical context.
Earning and Appreciating Money
There’s something about earning money that textbooks or lectures just can’t teach. Encourage your kids to take on simple tasks for a small reward or consider part-time jobs for older ones.
This teaches them the value of hard work and lets them feel the satisfaction of earning and saving for something they want.
Make Money Talks a Part of Everyday Life
Discussing money should be as normal as talking about the weather, but it doesn’t have to be a formal sit-down session. You can chat about finances when you’re doing the groceries, saving for a family vacation, or even when paying the bills.
These moments are opportunities to simplify money matters and make your kids comfortable with the concept of financial planning and management.
Teach them Budgeting
Budgeting is a fundamental skill that even adults struggle with. Teach your children budgeting by involving them in planning for small purchases or saving for something they want.
Show them how to compare prices, look for deals, and maybe even wait for the right time to buy.
Lead by Example
Remember, your children are always watching. The way you handle your finances, from budgeting to saving and making investment decisions, serves as a live tutorial for them.
If they see you regularly reviewing your expenses, saving a portion of your income, and making thoughtful spending decisions, they’re likely to mirror these habits in their own lives.
Learning Through Fun
Who said learning about money has to be boarding? The earlier your children understand the value of money, the better. Engage them with simple, fun activities like playing store, budgeting for a small family event, or using educational apps designed to teach money management through games.
These activities encourage curiosity and questions, laying a strong foundation for understanding the more complex aspects of finances later on.
Turning Hobbies into Income Generators
Encouraging kids to turn their hobbies into money-making skills can be a fun and educational experience. According to data from GoHenry, about 40% of young people have some form of part-time job, and a surprising 6% have taken the leap to start their own business.
Whether it’s selling art projects online or setting up a stand to sell handmade crafts, guiding your children to monetize their hobbies nurtures their creativity and introduces them to basic business principles.
Help them Launch a Small Business
With data showing that 25% of US kids and teenagers are planning to start their own business, it’s clear that the entrepreneurial spirit is alive and well among the younger generation. As a parent, your role is to support and guide them through this journey.
By encouraging your children to embark on their entrepreneurial ventures, you help them learn invaluable lessons about lending, taxes, budgeting, and resilience.
