You are reading Week 29 of 52 Weeks to Eliminate Debt & Curb Spending. Please read the overview here to learn more about the series & get your FREE financial planner. If you just joined us, please start with week 1.
Use you’re experiences and mistakes with budgeting to teach your kids healthy money habits. One important thing for kids to learn from your mistakes is that debt isn’t something they want to have. This week we are going to look at some practical ways to teach your kids healthy money habits.
Practical Ways to Teach Your Kids Healthy Money Habits:
1. Encourage them to save. Whether they receive an allowance, have birthday money or have a part time job, it is your job to encourage them to save their money. If you are at all in control of the money they receive (allowance), make savings mandatory.
Go with them to your local bank and open a simple savings account that allows them access to their money as needed, but also encourages them to put money away for the future. Some banks even off incentives for kids to open accounts. Out of sight often does mean out of mind. An actual savings account makes that much easier for children to manage.
2. Get them involved in family budgeting. Each month as you sit down to go over your own household budget, encourage your children to participate. Let them in on the inner dynamics of how your household runs, what it takes to pay for things like rent, insurances and food. Let them help make decisions, or look over the numbers and add or subtract to verify your calculations. Getting them involved teaches them healthy budgeting habits for future use.
Obviously, kids do need to be protected from certain aspects of your financial situation. While kids do need to realize there isn’t money for all their wants, you don’t want them thinking they can’t eat when their hungry because you need to save money. As parents know, kids something don’t fully grasp what is going on. Make your budget talks age appropriate.
3. Make them responsible for some expenses. For older children this is easier to encourage, but even youngsters with a small allowance can be held accountable for the way they spend their money. Things like buying gifts for friends birthdays, bus fare or even expenses related to extra curricular activities can all be items you require them to handle out of their own money. This teaches them real life practical budgeting, and helps them understand the value of their money in a more practical fashion.
My kids know there are certain things we will buy and other things they need to save their own money to purchase. If my son REALLY wants a new Nerf gun, he needs to save up his own money. It’s interesting to see how a toy or game previously HAD TO HAVE, it’s really necessary when they have to shell out their own cash.
One idea to help kids understand money is Financial Peace Junior by Dave Ramsey. My kids have completed the course. They even enjoy using the give, save, and spend buckets to track their money.
As a parent, you don’t want your children to suffer from the same mistakes you have made. These practical ways to teach your kids healthy money habits will help them to stay on the road to financial freedom as adults.
Week 29 Challenge:
Sit down with your kids and discuss what debt is, when it can be necessary, like home-ownership, and when it should be avoided, like putting new clothes on the credit card when you really can’t afford them. Teach kids that money really doesn’t grow on trees. Let them know that you do have to pay for the things you swipe with your credit card. Have them use cash and watch you do the same. Maybe let kids help add and subtract money in your cash envelopes for more hands on experience.
We live in a time when everyone expects instant gratification and believes they NEED the latest and greatest gadgets and toys to be happy. Help kids understand the value of a dollar and what it means to work and save for the things they want. They will thank you later.
Disclosure: I am not a financial adviser nor do I have formal financial training. All articles are for informational purposes only and should not be interpreted as financial advice or consultation. Please consult your account and/or financial adviser before making changes to your finances. All situations are different, so please consult a professional to determine your individual needs.