Studies have shown that we develop our relationships with money – both positive and negative – as children. The examples we see from our parents, and the lessons they provide, stay with us unto adulthood and shape how we manage our finances. For this reason, it’s important to be intentional about how we speak to our children about money. Below are four lessons to focus on in order to begin developing positive money mindsets in your kids.
Habit 1: Create a Monthly Budget – And Live by It
One of the foundational lessons kids should learn is the concept of budgeting. Understanding exactly where the family money is going each month is powerful, and it sets kids up for proper planning toward short and long-term goals as they get older.
Habit 2: Build an Emergency Fund of at Least $1,000
Rainy days happen, sometimes without much warning. Having a cash reserve is important so that something like an unexpected car repair won’t put you into debt. Talk with your kids about the importance of setting aside money for savings every month and help them do so as they earn allowances and receive monetary gifts.
Habit 3: Make a List for the Grocery Store and Don’t Deviate From it
Being disciplined is the best way to ensure your long-term financial health, and it’s important to show kids what this looks like in practice. Take them to the grocery store with you and set the example of shopping from a predetermined list and sticking to a previously determined budget.
Habit 4: Set Family Goals for the Future, and Plan Out Small Steps to Get There
Getting your kids involved in planning for financial goals that impact the whole family is a great way for them to begin to feel empowered and invested in personal finance. Let them take an active role in, say, planning your next family vacation and help them learn to goal-set and to develop strategies to achieve them.
Preparing your kids to be successful with personal finance is an important role that will affect them far into adulthood. Use these four lessons as the foundation and your children will get a solid start in properly managing their money.
Image via Unsplash/Fabian Blank