While money certainly does not buy happiness, lack of money can bring on a great deal of stress. Financial issues are often cited as a primary cause in the breakdown of marriages. Most parents attempt to reinforce the importance of working hard to earn money to their children. Parents who teach their kids the importance of financial responsibility help them to live a well-rounded life with better opportunity to appreciate the things that matter most. Here are five ways you can empower your kids by instilling them with common sense in money matters.
Savings are the first step
Parents who do not instill the importance of financial management in their children early on often see repercussions down the road. Get your kids into the habit of saving money when they are young to help them overcome the urge of spending everything they earn on frivolous items. Celebrate saving money rather than making it seem like an unpleasant duty in order to provide them with the money savvy knowledge that they will undoubtedly use later in life.
Help them establish goals
Dedicate time to your children to help them allocate their allowances toward smart goals. You can discuss the benefit of saving toward large ticket items that they would like to invest in, rather than low-priced, impulse purchases like candy and toys. Perhaps create a spreadsheet to track their savings. They will begin to understand that financial responsibility involves foregoing some immediate gratification purchases in favor of saving money for things that bring greater satisfaction. Kids are visual, and if they can actually see their savings moving them closer to acquiring a goal, it will help motivate them to make smarter financial decisions.
Be their partner
You can reward them each time they save money by matching what they save or matching by a certain percentage. All teenagers want to have their own vehicle when they get old enough to drive. As they approach driving age, tell them you will contribute a certain amount toward their car purchase based upon how much they have saved. It is also a good opportunity to discuss paying cash for a vehicle and maintaining a good credit score. Your goal should be to have them become self-reliant adults; not depending on you to bail them out of financial troubles.
Encourage participation in the family budget
Many exasperated parents fuss at their kids for wasting food and electricity. You can’t expect children to instinctively know the value of these necessities and their associated costs. The responsibility of making ends meet and keeping a roof over their family’s head are stressors for many adults. You do not want to overwhelm your children with more than they can comprehend, but you can use smaller necessities like grocery shopping opportunities to teach about financial responsibility. Have a set amount of money that must cover the family food purchase. Let them help make the purchases. They will begin to understand the value of balancing a budget.
Be patient
You may get frustrated at your kids for not grasping the importance of prudent money management quite as quickly as you think they should. Try to keep in mind that their habits are just forming. One of your kids may be more inclined toward responsible behavior than another. Let them make some mistakes, but keep them aware as well. Stay on track with your ultimate parental goal of preparing them for the real world.
To help your children set up checking and savings accounts, contact the courteous professionals at Florida Capital Bank.