How to Teach Your Children Healthy Financial Habits

We've already talked about how crucial financial literacy is for modern success. The evidence continues to mount that imparting money management skills to your children is a gift that will last a lifetime. Teaching your children about how to manage their money not only empowers them with essential life skills; it also sets the foundation for a secure and prosperous future. Today, we'll talk more about ways that you can spark your kids interest in financial management.

Make it a part of daily life.

Introduce the basic concepts of money as early as possible. There are a variety of games and activities designed specifically for children, but you can also give them practical experience by involving them in simple transactions. For instance, you can count out cash for a small payment, work together to compare prices on grocery items, or even teach them to calculate a tip for restaurant waitstaff. Taking the time to talk about money, ask questions about money, set goals, and celebrate achieved milestones, can teach your children that money can be a positive thing.

Create a savings and budgeting culture.

If you plan to distribute an allowance to your children in exchange for doing extra household chores or other family contributions, this will be the perfect opportunity to teach them the concept of saving. You can set up personal or family savings accounts—or old-fashioned jars or piggy banks—and save as a family for the things that matter to you, such as group vacations, gaming systems, or special treats. This is a great opportunity to involve your children in the budgeting process for family activities. You can discuss expenses, plan purchases, and allocate funds accordingly. Not only does this educate your children about budgeting, but it also reinforces the idea that financial decisions impact the people around you.

Share financial wisdom.

Many parents are reluctant to talk about money with their children because they worry that it will make them preoccupied in a way that will negatively affect their quality of life as children. While it is important to allow children to learn and develop in ways that are appropriate for their age group, it's also important to be transparent about family related issues, up to a point. Talking with your children about the family budget, expenses, and things that you are saving for as an adult can help them understand that money is a finite resource and managing money wisely can help give them the resources they need for the things that matter most to them.

In short, it's important to make money a readily discussed subject. The more that money becomes a taboo topic, the less people have a full understanding of the way that money works in their world, whether it is a child not understanding why they cannot afford their favorite toy or an adult not understanding that they deserve better pay. By creating an open and honest dialogue about money with your children, you'll be able to set them up for healthy financial success and educated choices in the future.