Educating your children good money habits early on will help them make the ideal decisions as soon as they’re older. Finding out how to save, spend, invest, and spend are crucial skills for financial success as an adult. Andrew Housser, co-founder of Freedom Debt Relief notes that the importance of education. He points out, “Help kids learn about financing. Involve your children in living in a budget, setting targets and working to achieve those aims.”
Talking to your kids about financing and modeling healthy financial habits are both great ways to introduce your kids to money, however, for it to really sink in, you have to incorporate actionable measures so that your kids can experience handling money on their own. Freedom Debt Relief urges these four methods to teach your kids good money habits.
- Give chances to earn money.
A way to really add value to money for your kids is to give them a chance to earn it. Give them an annual allowance according to actions they do each week. The number of actions and the dollar amount needs to be based on their age, ability, and what you could afford to cover them. Attempt to be consistent with providing them the allowance each week. If you aren’t consistent about it, then the allowance may have less of an impact. However, Freedom Debt Relief recommends that you maintain them accountable for their actions. If they don’t finish the tasks delegated to them, they should not receive their allowance.
- Open a bank accountwith your kid.
Let your son or daughter open an accountwhere you are the custodian on, in which they could save their own allowance, birthday money, or any additional money they may receive. This presents them to the way the banking world works and the way to save money. Freedom Debt Relief recommends that you check local banks to get applications for kids. A lot of them have savings strategies and even rewards for the small ones (such as stickers) who earn a deposit in their accounts. Older kids can even receive a check or debit card which you can utilize to educate them the way to manage spending.
- Teach them how to allocate their money.
Learning to save money is a vital skill that children should learn, but it isn’t the only money skill. Freedom Debt Relief suggests teaching your kids how to make smart decisions with their money. They should discover how to spend money on saving, spending, giving, or any other types which you find important. The way you and your kids specifically devote the money is up for you. The purpose is to educate them how to market and set good habits early on.
- Reward them.
Based on their age, your kids may require a bonus for establishing good money habits (and that sticker from the lender for making a deposit might not cut it). Thus, be sure as you devote money, a part of it is to get their own spending enjoyment. Freedom Debt Relief recommends that you let them possess the capacity to decide what they want to purchase. If it is something expensive, then this is just another opportunity to show them they will have to save up on it. Or, if they’re anxious to spend it, let’s do this. They could later regret not having enough for this “big” thing they wanted, but you can point it out for them they will have to save up to it. Mistakes are great for studying also.
In accordance with Freedom Debt Relief, by setting such good habits early on, your kids could be less tempted to make impulse buys or conduct up unnecessary debt as soon as they’re older. They’ll also know how to spend less for now and the future. These skills will equip them to the financial challenges of adulthood.