If you want to help your kids develop a robust financial foundation, you need to start by teaching them good money habits. Many experts maintain that the earlier you teach your kids about money, the better. Fortunately, thanks to innovative apps, teaching kids important financial lessons has never been easier nowadays.
Teaching your kids how to be financially savvy is a crucial life skill. After all, money can dramatically impact their quality of life. However, teaching kids wise financial habits can seem daunting if you are not financially savvy yourself.
The good news is while challenging, it can be done. Below are five of the most important money habits you should teach your kids:
Money Habit #01: Teach them how to create a budget.
It is ideal that your kids learn about money management and budgeting at a young age while the stakes are still low. If your teen has some form of cash flow (either from part-time jobs or from their allowance), you should teach them how to create a budget and adhere to it.
They also need to know how to differentiate their wants from their needs so they would know what to prioritize. In addition, they must be aware of the money coming in and out so they can see where their money goes. It would be a good idea to use your household budget as a teaching tool.
Money Habit #02: Teach them to save money regularly.
As soon as your kids become familiar with the concept of cash flow and learn how to track their expenses, it would be wise to teach them the importance of paying themselves first. Paying themselves means setting a specific amount or percentage of their earnings or allowance for themselves.
To further encourage them to save more regularly, it would be a good idea to help them open their own savings account. It is easier for kids to learn the value of saving when you allow them to manage their own money. It is also easier for them to stay motivated when they see their money growing.
Money Habit #03: Teach them how to create sound financial goals.
Saving and spending money wisely are two factors that are critical to financial success. However, learning how to create smart financial goals is just as important. Teach your kids how to create sound financial goals by asking them to write down their future financial goals.
From there, you can educate and teach them how to achieve those goals. As soon as they have a clear idea of what they want and how to achieve their future financial goals, they can easily plan their finances around those goals.
We create customized financial plans that are inclusive of budgeting, setting financial goals, savings, debt management, investment planning, tax planning, retirement planning, credit planning and more. When you are educated on these important components of financial planning we show you the framework to teach your kids in our Gold Membership for personal financial planning and in our Platinum Membership for business owners.
As your kids prepare for higher education, it is recommended that you teach them about the importance of investing their money and the power of compounding interest. Aside from using apps, you can teach them about investing using high-interest savings accounts.
Once they learn the basics of investing, you can introduce them to bonds, stocks, Roth IRAs, and other smart investment options that can help their money grow faster and help them fulfil their long-term and costly financial goals.
Money Habit #05: Teach them about the value of delayed gratification.
If you want your children to learn not to spend their money recklessly, you need to teach them about the concept of delayed gratification. While it can be hard to say no when your children ask for something, you need to teach them how to work for what they want or save money so they can appreciate the value of things.
You can also ask them to save more or do extra chores to save enough to pay for what they want. This strategy can also teach them the link between money and work.
Final Thoughts
Before you know it, your kids will become independent adults who need to manage their own money. With your guidance and the right tools, they can manage their money wisely and become financially prepared for whatever lies ahead.
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