Setting an example for your family is one of your biggest responsibilities as a parent. And more so than ever, it’s a good idea to pass on healthy money habits to the next generation. With inflation at an all time high and costs becoming harder to cope with, knowing your kids have a good head about their finances will give you peace of mind as they grow older.
But what money habits are the best to pass on down through your family? It’s a hard thing to decide on! Plus, if you’ve always struggled with finances yourself, you may even feel you’re not confident enough to teach them about money. However, a little goes a long way. And we’ve got some handy tips below that can help. Check them out for some advice on setting a good example when it comes to handling money.
Teach Them How to Earn Money
Earning money is a skill just like any other. Yes, your children will have to work to pay their way one day, but they need to know now how to do that. Having a good work ethic rarely comes naturally. And on the other side of this, if they don’t know how to work and reap the rewards, there’s a chance they’ll work too much and lose out on the other parts of life too.
You can start this lesson off very easily at home. Set them a task to do, such as vacuuming or loading the dishwasher, and then set a price on it. Keep it small for tasks like this, a.k.a., normal household chores, but increase it for miscellaneous work. Such tasks will include washing the car or mowing the lawn, or even running errands for their parents.
Use Physical Price Tag Examples
A physical price tag is simply taking the price of something your child wants to buy, such as a toy or a game or a costume, and going through the value of that price. So if they want to buy something, they have to take some money out of their jar. Sit down and do this with them.
Show them in clear detail how much money is being removed, and then count through how much they’ll have left. Make sure they understand that once this money is gone, it’s gone, and they can’t just ask for more or have it back.
This teaches your kids that spending money is a decision you go into carefully. If you want to buy something, it’s best to weigh up your options first, or to wait and see if the price comes down. If they don’t rush into something, they may even have more money than when they started.
Set Small Savings Goals
Small savings goals will help your children to set serious saving goals later on in life. Say they want something that costs $14.99 but only have $2 in the pot at the moment. To reach their desired goal, how much will they need to save each week, and how long for? Work this out together to help motivate them to work towards their little goal.
If they get pocket money allowance, or they get a bit of money for doing tasks like we mentioned above, this goal could be reached in a fortnight. But if they don’t get either, what will it take for you to hand over some money to help them reach this saving goal? You can help them realize the value of money here, and just how hard saving really is.
Show Them Asking for Help isn’t Bad
Talking about money can still be taboo, even in the 21st century. However, you’d never want your children to go without, or to feel like they couldn’t talk to someone about money troubles. So teach them right now that asking for help isn’t bad. You can do this by getting in touch with financial advisers and going through the process in view of your kids.
You can keep the details to yourself, but don’t hide the fact that you’re reaching out for a little advice. Then make sure they know they can always come to you if they need a little financial boost. With good money habits, they’ll be sure to pay you back!
Make Them Wait a While Before Spending
This way you’ll save your children from falling into impulse traps. After all, if they still want a toy in a week’s time, then it means they truly want it! But if they completely forget about it in that time, it means they just wanted something shiny and new to play with.
If they don’t have the spending money to waste in that meantime, they’ll still have it to use later on when they actually do want something. It’s a simple little rule that’ll teach your kids a form of delayed gratification. They can wait to achieve a goal, and even do extra to work towards it in that time.
Most of all though, it shows them they don’t need something right now, especially if it’s expensive! They can go without for a bit, if they don’t need it to live, and then get what they want when the proper time comes.
Explain Why Budgets are So Useful
Running a budget is a great way to live. The kids need to see that. So why not help them come up with a budget idea of their own? If they want to buy something now with their own money, but also would like to buy something next week too, show them how to budget for both purchases.
In doing so, you can show them how to ‘map out’ their money needs. If it’s in front of them in full, they can see exactly how money moves. That’s a very useful visual representation to have, just like their favorite book!
Money is Hard Work, So Show it!
It’s only natural to hide any money worries from your kids. You want them to grow up content and happy, and to know that you’ve always done your best for them. But if you want them to truly understand the value of money, it’s worth it to walk through a few of these issues with them. Money is hard work – both making and saving it – and that shouldn’t be something they only find out in their late teens or early adulthood.
As such, it might be hard to break down your current money worries into child-size pieces, but it might be necessary. For example, you can have them sit with you as you make the budget for the week. Show them the sheet you use, how much you have incoming, and how much you can afford to spend. If they ask why you can’t spend anymore, this is the perfect chance to tell them how money doesn’t last forever.
You can’t pay for everything, no matter how much you might want it, and that sometimes it’s better to wait for an item than try to have it right now. Indeed, you can really compound all you’ve taught them up until this point by using this method.
Your child being able to handle money without too much trouble is every parent’s dream. However, it doesn’t have to stay a dream! Your kids can grow up with good money habits all thanks to the good example you’ve set. And if you’re not quite sure how to do that, keep the tips above in mind.