It’s never too early to start planning your financial life. Likewise, it’s ideal to start teaching your kids some financial lessons as they grow to help them be more money-conscious. A financial literacy survey revealed that only 23% of kids often have conversations about money with their parents, indicating a need for more parents to teach their kids about money matters. Here are some practical tips to help you raise financially savvy kids.
1. Help them prepare for their future
As a parent, aside from raising your kids to be financially savvy, it’s best to help them prepare for their future. You can start by opening a savings account for them. You can also instill a habit of saving in them by getting them a piggy bank when they’re little, so they can save towards short-term goals that are tangible to them.
It’s prudent also to start planning for their education and encourage your kids to think about their future financial options, especially when they’re older. Suppose they desire to study abroad someday. In that case, aside from opening an account, they can consider other financial options later in life, such as student loans for studying abroad. It’s essential to teach your kids about the pros and cons of their financial decisions as they become adults.
2. Have practical conversations with them
You can start having money conversations with your kids as soon as they’re able to count. You only need to tailor the nature or complexity of your conversations to their age. An older child will find it easier to understand discussions about budgeting and financial planning. In contrast, a younger child will relate more to counting coins, reading how much an item costs, etc.
As they mature into young adults, you can have more in-depth conversations about the impact of their financial decisions. During these meaningful conversations with them, also allow them to ask questions to learn from you and also enable you to gain insight into their perspective on things.
3. Set goals together
If you don’t let your kids understand why they need to save, they may not see the essence and take a casual approach to manage their finances. A great way to challenge them to be more conscious about their spending is to set goals with them. These goals will serve as a guide and motivate them to work towards the bigger picture.
For instance, if they want to buy a gift for a loved one, you can help them set realistic goals such as saving a certain amount every week, so they can finally get that gift. Breaking these goals into small, actionable objectives will make it easier for your kids to achieve them.
4. Encourage your kids to make money by working
You don’t need to wait till your kids are in college before teaching them the value of earning money through work. Guiding your kids to find honest ways by which they can make money will help make them more financially savvy as they grow up and help them appreciate hard work.
They can start with little steps such as selling lemonade, assisting in the garden, etc. You can occasionally reward them when they do some chores around the house, but it’s essential to strike a balance and not make it too much of a habit, so they don’t end up associating those chores with money all the time or becoming entitled.
5. Help them know the difference between a need and a want
Although you may always want to get your kids what they want right from when they’re little, you’ll eventually need to teach them how to differentiate between a need and a want. You can explain to them how sometimes they may need to forego a luxury to prioritize the necessary stuff and identify what they can afford to overlook for now.
As they understand this better, they’ll be more careful in their spending decisions. However, it would help if you adopted strategies not geared towards making them stingy but rather to make them more conscious of their spending. This way, they’ll make wiser and more beneficial choices for themselves without becoming miserly.
6. Teach your kids how to track their finances
One advantage of tracking finances is that it helps you quickly identify where you spend the most. As such, it’s best to help your kids develop the habit of monitoring their expenditure. Doing this will also enable them to save some money. They can start with a notebook to track their spending weekly or monthly and share it with you afterward.
Some fun apps can also help your kids track their finances. This practice teaches them a thing or two about accountability.
7. Be an example
The financial lessons you teach your kids will stick even more if they see you putting the same principles into practice. If you encourage them to be conscious about their spending, but at the same time, you buy on impulse almost every time you visit the grocery store, they may not see the need to practice the financial lessons you’ve taught them.
If there are any financial habits you want your kids to adopt, it’s best to set examples for them that they’ll never forget.
8. Instill a habit of giving
In raising your kids to be financially savvy, you shouldn’t forget to teach them valuable life lessons, such as giving. If you’re passionate about giving and helping others, you can encourage your kids to start from an early age.
You can let them have a separate jar to keep some of the money they make or save to give out. Then you can help them identify a charity to which they can donate. Doing this will also fuel a desire in your kids to make an impact wherever they go.
These practical tips will help you guide your kids and build a solid financial future for them. As you raise them to be responsible in their finances, remember not to be too hard on them, but rather strike a balance between teaching them to be disciplined and giving them the room as kids to grow.
