A great way to make sure that your children are prepared for the world as adults is to instil good money habits in them. Much of the complication and frustration of your early adulthood can be mitigated by having a firm grasp on your finances and avoiding difficult financial situations.
Picking the habits
The ideal first step in passing good money habits down to your children is to define what you consider ‘good’ habits. Consider the money habits you exhibit and which ones you are most proud of. Think particularly of any lessons you may have learned the hard way. These are important to share with your child so they don’t have to follow suit.
Some of the most frequently valued habits include:
- Saving – to make sure they always put a little bit aside for a rainy day
- Charitable giving – to instil the habit of being generous with what they have
- Investing – to ensure they are patient and well prepared for the future
There are many other habits you can choose from, these are just three of the most frequent. Remember, this is a matter of sharing the habits that make sense for you and your family.
The best way to ensure that these habits stick is to start teaching your children early. Some studies show that the way we think about money is solidified by age seven! This means that starting young is important. There are many different ways to teach children about money and some will fit your goals and values better than others.
Tips for teaching children about money:
- Have open conversations with your child about money. By age three, many children are already able to understand basic money concepts.
- Be consistent with any allowance or pocket money routines. For children, the repetition will help them understand the conditions in which they receive money. Additionally, a firm ‘no’ when they have spent it will help them understand that it is a limited resource.
- If you attach pocket money to chores, children are more likely to understand the value of it and what will be required in the future for them to receive it.
- Another way to work is through a ‘reward chart’ system where they get points for doing good things that they can then exchange for sweets or a toy. You can create a tiered system here to show them how saving can mean getting a better reward.
- Bring these lessons into the every day. In addition to being open with your children, ask them to help you with simple financial tasks like comparing items at the grocery store to see which has the better ‘per unit’ price.
Passing down values
Studies have shown that passing down your values is not only more important, but also more of a priority than passing down money. Using money habits is one way to practically achieve this. It’s also important, as you teach these habits to your children, to connect them to the values that you hold. These values can be easily reflected in the habits that you teach them. Donating to charity will espouse greater generosity; savings and investments teach patience. Connecting pocket money to chores showcases the value of hard work.
No matter the values or money habits that you and your family hold dear, it’s important to share them with your children and to start them early. Nothing can set your child up for success as well as teaching them how to be responsible with their finances.