Financing the Future: Teaching Money Mastery to Kids

8402437842_2dde916363Image courtesy of Hobbies on a Budget

More than likely, if you’ve made any resolutions this year, they’ve got nothing to do with teaching your kids about money. At the beginning of each new year, many resolutions are, in fact, directly related to finances: to save more money, make more money, spend less money or make wiser money choices, but hardly anyone gives a lingering thought to involving children in the process.

Why not?

After all, if we don’t teach our children how to successfully manage their money, who will do it for us? Sure, they’ll learn the number value of each coin in grade school, but their parents’ actions and attitudes towards money will have a much greater impact on how they handle their own finances later in life.

Along with your own personal self-improvement goals, set out to make 2014 the year that your kids get a better grasp on the real value of money.

  • First and foremost, remember that talking about money with kids isn’t forbidden. While it’s true that many of our parents (and their parents) felt the topic was off-limits – that doesn’t mean we have to continue that trend. With consistent practice, you’ll get more comfortable with being honest and open about things like the economy, the cost of utilities, debt, investments and making purchases.
  • Constantly swiping your debit or credit card can send kids the message that there’s a never-ending source of money at the other end of that ‘magic’ card. If the concept of a bank account is never explained, it will be many years before they’re able to really understand the value of money. Try to make purchases with cash around your children as much as possible, especially when they are young. The concrete visual of handing dollar bills over to the cashier will help kids in understanding that, once you spend those dollars, they’re gone.
  • It’s common practice to present children with monetary rewards for earning good grades. Most parents believe they’re doing their children a favor by encouraging superior report cards, guaranteeing their entrance into a respected university. Furthermore, that college education will provide the children (now young adults) with impressive job opportunities, leading to an upscale and lavish lifestyle. The problem with this line of thinking is that a reliable or even abundant income alone does not ensure financial success. In recent research performed by Financial Finesse, the results showed that regardless of income bracket, the most important skills for financial success are the ability to maintain a personal budget and having an effective plan for growing their money. So, when you hand out those monetary rewards, go one step further and teach your kids the best ways to manage the money they’ve earned.
  • Put your money where your mouth is. Remember that your kids will learn by watching you, and this includes how you spend. Reinforce the importance of living within your means and not spending more money than you have. Teach your children the difference between a “need” and a “want.” Also resist the urge to give your children everything they ask for to reinforce that “wants” are for special occasions.

It’s always a good idea to remember that, as a parent, you’re priming a little person so that he or she can grow into a successful adult. You teach them the ABCs, the colors of the rainbow, manners…an endless list of things that totals the person they’ll turn out to be. Why not give them a leg up when it comes to money, too?

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One Response to Financing the Future: Teaching Money Mastery to Kids

  1. Pingback: Preparing Your Child for Financial Success in College | Veitengruber Law

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