Opening up the lines of communication early and demonstrating good financial decisions on your own could set the children in your life up for success. Here are four tips on how to do it.
The “do as I say, not as I do” approach may not be successful. You may inspire children to be more responsible with money by talking over age-appropriate family financial decisions with them and outlining the reasons for your actions. By modeling healthy financial habits and engaging them in more complex topics as they grow older, you have the chance to equip them with the ability to think critically about the important financial decisions they might face in early adulthood.
Before children enter school, most children are able to comprehend concepts like saving for a major purchase or earning money by working for others. Keep these conversations ongoing. As they grow older, they may learn about more in-depth topics such as investing, using insurance to protect against major losses, how to save for retirement and buy a home.
Instilling in children the ability to delay gratification can help create a lifelong habit of saving. This strategy means providing children with opportunities to earn money through chores, babysitting and working summer jobs. Confidence is gained when children are able to use their own money for a purchase they want. Many banks even offer debit cards with additional protections to help them learn to manage their accounts, make budgeting decisions and save for the future.
Part of a conversation about delayed gratification involves talking through major spending decisions before making them. It may often be tough as a parent or role model to step back and let children spend their money on something you would not purchase. It is okay to point out that a certain item may not be worth the money the child is planning to spend. Part of learning to make wise financial decisions may mean making mistakes along the way. In the long run, this will keep them centered around careful guidance and allowing independence.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This article was prepared by Eastwood Wealth and WriterAccess.
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