Most parents will have the drug and the sex talks with their children, but what about the money talks? Statistics show that very few adults have been educated properly on how to manage their own money. This may be indicative of the enormous amount of personal debt our society is facing right now.
Today’s parents can change this by teaching their children to be financially responsible starting at an early age. Remember, children are great imitators and learn by observation so it is important that you lead by example and teach your children how to make responsible money choices. Start sharing information with your children today and continue as they grow and develop. The financial skills that they learn will help them on their lifelong journey toward healthy finances.
A great lesson begins with hands-on money management experience. Start by encouraging them to save a certain percentage of all the money they receive from their allowance, gifts and jobs well done. They can spend their remaining money as long as it is meets your established family limitations and values.
We all learn from mistakes, so allow your child to make them. If they spend all their money on one item and have none left, they will have to wait until they earn more money before their next purchase. This is a great lesson in delayed gratification.
Teach your children how to set goals. Encourage them to work hard and continue saving to reach their goal. They will learn that by continuing to save their money, it will grow into a larger sum which will enable them to make that special purchase. This will help them experience a great feeling of accomplishment.
As your child matures, teach them the art of budgeting as well as the differences between debit and credit. You can do this by making them aware of your monthly household bills and teaching them how you are responsible for paying each on a certain date. You may also want to show them how purchasing on credit can incur interest charges which can greatly increase the cost of the items purchased.
Giving your children a financial education will help them develop skills of independence, reasoning and responsible money practices. They will learn that money must be earned through skills and hard work and that saving and spending wisely is important for their future financial health.
Through education and example, you will be helping the next generation work towards a successful financial future.