Kids emulate their parents in many ways and follow their example. This means that parents can offer financial education for kids right at home. Parents must help their kids learn good financial habits and teach them to have a healthy relationship with money.
Teaching Kids About Money
Schools don’t impart knowledge on how to handle personal finances. But as a parent, you can teach kids money management strategies from a young age, right at your home. This will help them become financially responsible adults. They will even make smart financial decisions in the future.
5 Financial Habits of Parents that can Impact Child’s Financial Future
1. Learn to Say No
Learn to say no to your kids. When you give in to every demand of the child, you would be demonstrating that there is always money to spend on their whims and fancies.
This may lead to them feeling entitled when they grow up. They will struggle with money management as teenagers and adults. They could end up overspending and go into debt.
2. Involve Kids in Money Talk
It is important that parents talk to their kids about money from a young age. Communicate with them about household finances, investing, spending, savings and planning for the future.
Talking about money will instill its importance as they grow up. If they are clueless about money management, they will grow up spending money without thinking. They could end up with bad financial habits such as overspending and under-saving.
3. Budget to be Financially Organised
One of the best ways to stay financially organized is by making a budget. You must compare the inflow and outflow of money on a monthly basis. Don’t miss bill payments or credit card dues.
The kids will learn the same from a young age as they watch you being financially organized. You don’t want your kids to be unorganized and miss their bill payments when they grow up. And you definitely wouldn’t want them going into debt.
4. Have an Emergency Fund
One should be prepared for emergencies of any kind. Contribute some money every month towards the emergency fund.
This way your children can see that you are saving for a rainy day. Your kids will follow your footsteps and save for an emergency fund from a young age itself.
5. Save and Invest for the Future
If you have saved and invested thoughtfully throughout your life for long term goals, your kid will do the same as an adult. Plan and save systematically for the future.
Involve your kids and make them understand the process of saving and investing. The kids will eventually learn to take financial responsibility and become disciplined when it comes to money. They will also learn the importance of saving, realizing a financial goal by planning properly and the understand the power of compounding.
Set an example for them and show how to handle money. Start saving for child education and talk to them about tuition fees and saving money in college. Your teenager may end up being well-versed with money than algebra!
About Author
Shiv Nanda
Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life's mission to help and educate people on various financial topics, so email him your questions at shiv@moneytap.com.
