By Brenda W Hargroves
OK, so maybe no one ever taught you how to manage your money. That’s no excuse not to learn and begin practicing sound habits. More important, be sure to pass the knowledge you gain and the practices you master on to your children. Let’s face it. This stuff isn’t taught in school anymore. So, ensuring that your children are prepared for the future is your responsibility.
First, Assess Your Relationship With Money
Understand first and foremost, that you are the role model. Your children will learn a lot from how you view and manage your money. Therefore, it is up to you to practice good financial behavior. That being said, no one is perfect. Discuss your financial mistakes with your children. Let them know that bad judgment is not the end of the world. The important thing is to learn from your mistakes, then do better. Impress upon them that persistence, time and patience pave the road to financial success.
Practice Full Disclosure
Include your children in family financial discussions. Show them your budget so they can begin to understand income, spending and saving. If things are a bit tight, ask them to suggest where expenses could be cut or to think of what actions they can take to help. Involving your children in the family financial decision-making process can have an empowering effect on them.
Start When They’re Young
Managing your money is a lifelong task. So, why not make it fun by turning it into a game? And, like any other game, the goal is to figure out a way to come out ahead or win. Teach your children to also envision the process as competing with themselves to win the prize.
You can start the game by giving them an allowance for completing household chores. Although I am not a fan of this, some parents choose to reward their children for good grades. I believe children should be held responsible for earning the best grades they can when their parents harbor the responsibility of meeting other critical needs (a roof over their head, food, clothing, etc.). But either of these choices teaches them that money has value.
Saving Is A Critical Stipulation
Part of the allowance deal should insist that children start to save for something they want. Have them set goals and then stress that the only way to reach them is to save. Suggest that they set a short-term goal for something they want soon and a long-term goal for something they want in the future.
Start simple. Teach your children to place part of their earnings in a piggy bank. Once filled, help them open a savings account. Introduce them to the concept of earning interest. As they grow older, move on to exploring financial tools and apps that will help them manage their expenses.
Investing Is The Next Step
Start investigating the concept of investing in stocks. Determine a company that interests them. An example could be their favorite gaming company or their cell phone provider. Start tracking the company’s performance. Yahoo Finance is an excellent, user friendly place to begin the research process. Seek out ways to purchase small amounts of stock such as Robinhood or Schwab Stock Slices.
The Most Important Lesson
Make sure your children understand the value of good credit. A good credit score is the essential tool needed for successful money management. Early on, they need to learn how one’s credit score is determined and the benefits of gaining and maintaining good credit. As they get older, they should be taught responsible use of credit cards. I had a friend who had to file bankruptcy before age 25. You do not ever want this to happen to your children.
To close, I quote Bruce Lee who said, “Instead of buying your children all the things you never had growing up, teach them all the things you were never taught. Material wears out but knowledge stays.”
And who knows, you may learn a thing or two along the way!
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