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How to raise your children with wise money management skills?

by | Apr 11, 2023 | Personal Finance

As parents, we all want to see our children grow up to be successful and financially independent. One of the best ways to achieve this is by teaching them wise money management skills from an early age. This will not only help them avoid financial pitfalls in the future, but also ensure that they have a solid foundation for building their financial future.

So, where do we start? Let’s take a look at some practical tips for raising financially savvy children this family day.

 

Teach your kids self-awareness

A person’s spending habits are often influenced by their personality traits. For example, if someone is impulsive, they might make purchases without much thought, while someone who is more patient might take time to consider their options before spending money. This is why when it comes to teaching your child about money management, it’s important to start with self-awareness. As a parent, it is crucial that you help your child understand their own personality and how it could impact their spending habits. One way to do this is by encouraging them to keep a spending journal. By tracking their expenses, they can identify any patterns or mistakes they’re making and make adjustments for the future. This will help them make smarter financial decisions in the long run.

 

Help them differentiate between needs and wants

The ability to resist the urge to spend money on things you don’t really need, is one of the key aspects of being financially savvy. Therefore, it is important to teach kids the difference between needs and wants, so they can make better choices. For example, buying a pair of football shoes for a tournament is a need, while going on an expensive outing with friends is a want. If kids learn to separate their needs and wants early on, they’ll be more likely to make smart choices as teens and adults. Building self-discipline can be tough, but with some guidance and leading by example, it’s definitely possible.

Have open and honest money conversations with them

When kids understand the value of money and how to manage it responsibly, they’re more likely to make smart financial decisions as they get older. This is why it is important to have open and honest money conversations with our children. Regularly talk to your children about things like saving, spending, and investing, to help them develop good money habits early on. By having these conversations in a positive and supportive way, you can help them build confidence and a sense of responsibility when it comes to money.

 

Model good spending habits

When it comes to teaching kids about money, leading by example is crucial. You can show them good spending habits by explaining why you’re making certain purchases and when it’s appropriate to wait and save up for something instead of buying it right away. For example, let’s say you’re at the store with your kids and you decide to buy the generic brand of cereal instead of the more expensive name-brand. Take a moment to explain why you made that choice and how it saves you money in the long run. Or, if you’re planning a family vacation, involve your kids in the budgeting process so they can see how much things cost and how you prioritize spending. By instilling good financial habits early on, you’re giving your kids the tools they need to be confident and responsible with money as they grow up.

 

Instil a habit of saving

Saving isn’t just about building a nest egg for the future—it also teaches discipline, goal setting, and planning. To get your kids into the savings habit, start with short-term goals, like saving for a toy they really want. You can encourage them with simple messages like “Saving is a great habit” or “It feels good to save money.” With a little encouragement and guidance, your kids can become smart savers and savvy spenders!

 

Teach children how their money can grow

Want your kids to be wealthy and financially savvy? Consider teaching them about investing! You don’t have to be a financial expert to get started. For example, setting up custodial investment accounts for your children can help them see their money grow over time. And if you’re not sure where to start, there are plenty of resources available, like books that explain investing in a fun and easy-to-understand way. By teaching your kids about investing early on, you’re giving them the tools they need to build wealth and make smart financial decisions in the future.

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