The foundation for lifelong financial health begins in childhood. Children absorb lessons from parents and other adults around them about how money is regarded, spent, given and saved. They carry these lessons throughout their lives and use them, consciously or unconsciously, in the management of their own financial affairs. Help your children get on firm financial footing by using some of the following tips.
1.As soon as children are old enough give them a glimpse of the inner workings of your family’s finances.
Many children mistakenly believe that parents have access to unlimited supplies of money; it simply comes from the machine. Additionally, having little real world experience children often have unrealistic ideas about the amount their parents earn and how much it costs to manage the household. Consequently, when you say no to an earnest request because you don’t have the money, it can be difficult for children to believe that you are being honest. You can help children understand the whole business better by making it transparent. When you make gifts to charity, pay the mortgage or other household bills let your children participate. This is a good time to broach topics such as prioritizing expenses, budgeting, saving and giving.
2.Give your children an allowance
An allowance gives children the opportunity to take some responsibility for their finances while you are still around (we have all heard stories about young people going off to college and get into financial scrapes that parents are left to address). Rather than reach in your pocket each time your child has a request, why not encourage your young one to save a portion of his or her allowance to purchase the coveted item. You may be surprised to learn that the need isn’t so great any more. At the very least setting up such a system can help you alleviate the guilt many parents feel on having to tell children no. Children should also be encouraged to keep their own money for daily expenses so that they have experience of making it last between allowance distribution; and to save toward long-term goa
3.Set budgets before setting out for school shopping or similar excursions.
It can be very difficult to resist the whining and disappointed looks from kids that have school clothes shopping fantasies that in no way resemble your budget. Talk about how much you will contribute before you go to the store and stick to previously discussed limits. Let the child take responsibility for his or her money decisions once you reach the store. For example, if s/he wants two pair of jeans at $50 rather than 5 at $20, allow him or her to make and live with that decision.
4.Involve your children in your own financial goal setting and planning
For example, if you are saving for a new house or family vacation involve everyone in your family in discussions of how much it will cost to make your dream come true, and what cutbacks or sacrifices (and how long) you will need to make along the way.