We all want what’s best for our children. I’ve seen so many people struggling to create a better life for the next generation yet they don’t give their children the financial knowledge to maintain that better lifestyle.
Forget about buying your children a new video game. Here’s how to give them the financial foundation to be able to buy their own video games – and anything else they want as they grow and mature into adulthood.
Use allowance as a teaching tool. Many kids grow up thinking their parents are a piggy bank. Empower your children to make their own spending decisions by giving them a set amount each week or month that they can use in any way that they want. Give them a couple of rules: they must save a portion in a savings account and donate a portion to charity. In doing so, they get a handle on how to prioritize when there are limited funds.
Explain the concept of a budget. When your children want something that isn’t in your spending plan, don’t just tell them ‘no.’ Take the time to explain that there is a certain amount of money allotted for different things each month. If they have their hearts set on it, tell them they can do extra chores around the house or save their allowance for a portion of it and you’ll chip in the rest once they do so.
Pay bills together. Children learn a lot about life by watching the adults they trust. If your children see you sitting down to pay bills at the beginning of each month, they know the importance of paying bills regularly and on time. If children never see you handling your finances, they don’t understand that money is something that requires time and effort to manage.
We’ve all made our share of financial mistakes. Let’s make sure our children learn from them.