As a parent, you should begin teaching your children the value of money from a young age. This will help them develop better financial habits long before they become adults. It should involve teaching them the best way to give in addition to developing strong personal spending and saving habits. This guide can help you develop financial maturity in your children.
Teaching Good Saving Habits
You can use an allowance to help your children learn how to save at a very young age. If there’s something they want, explain that you’ll pay them an allowance based upon the chores they do in the home. You should also establish a consistent rate of pay. This will force them to choose how they save their money to ensure they can afford the thing they really want. This is also a good time to teach them about savings accounts and earning interest. Help them open a savings account, and show them how to keep track of their savings.
Teaching Good Spending Habits
The same system will also teach your children better spending habits to ensure they can save for the things they want for themselves. This part of teaching personal finance may be the most challenging for your children to learn in that they will have to distinguish between instant gratification and being able to afford more important things in the future. By forcing your children to use their own earnings to buy what they need, you’ll teach them to avoid frivolous spending.
Teaching Good Philanthropic Habits
Children have very empathetic hearts, and they want to help everyone in need that they come across. Here lies another opportunity to teach smart spending. Your children should be taught to take care of their own financial needs before donating money to any cause in your community. Instead, teach your children the value and rewards of donating their time to important causes. They can still have a positive effect on the less fortunate in their community without putting themselves in a dire financial situation.
Although you’ll always worry about your children, teaching them these good habits will ensure you’ll never have to worry about how they handle their finances. By the time the go off to college or start their own career paths, you’ll have instilled good personal finance habits. This will save your children from making some of the financial mistakes you made in your early adulthood.