If there’s one news category that has everyone equally concerned, it’s the nation’s economic health. There may be a lot of arguing about solutions, but everyone—Democrat and Republican alike—agrees that something needs to be done. And we all want our children to be well equipped to make sound financial decisions. And that’s where you come in, Dad.
It turns out there’s a lot we can do to prepare our children to be fiscally responsible adults. But whatever the approach, parents need to start when their children are still kids so they’ll have great habits by the time they’re adults. Here are 5 things you need to do now so your kids are not broke later.
1. Model sound financial sense.
Don’t spend money you don’t have, don’t buy stuff the family doesn’t need, and don’t complain about the “unfairness” of running short. Instead, let your kids see their parents being thrifty, talking respectfully with each other about finances, saving ahead for major purchases, and maintaining a good balance between family and work.
2. Be an open book.
Let your kids see the way you make financial decisions. Keep an age-appropriate running dialogue going. “Let’s go to the game, kids. I have some extra money this week.” Or, “We’re camping for vacation this year because there’s not enough money for the cruise we talked about. But we’re still going to have a great time as a family!”
3. Start the kids on a savings plan early.Good habits today are strong indicators of good future behavior.
That means immediately if not sooner, starting with gifts and allowance. Good habits today are strong indicators of good future behavior. Saving must be ingrained by the time kids start earning money via work. It’s not optional if we want to teach fiscal responsibility.
4. Establish a relationship between work and buying power.
Make sure certain items are not available except by hard work and longterm savings. Maybe it’s that upgraded bike, the tablet they want, or their first car. Kids will place a higher value on money when they have earned it. They also will have more appreciation for the items they purchase themselves and they’ll internalize the relationship between work and material possessions.
5. Never bail kids out of financial responsibility.
Sometimes it’s tough to enforce natural consequences. But if your kids didn’t earn enough money, or failed to save properly, then the benefit associated with money they don’t have should be forfeited.
Sound off: What are some other things we can do to teach our kids about money?
Huddle Up Question
Huddle up with your kids and ask, “What is something you would like to buy and how long do you think it will take to earn the money for it?”