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Good financial habits are something that can take you far in life. They can help ensure you secure yourself not just for a few years, but well into retirement. Being smart with money is something that will offer bigger payouts the earlier you adopt the practices. So, if you’re a parent of young kids, this means there’s no better time than right now to start teaching them the importance of good financial habits. Here we’ll take at some of the most effective ways you can start teaching your kids good financial habits so that they have a bright future ahead of them.
Give Your Child an Allowance
Here’s a tip that is usually step one for parents looking to teach kids good financial habits. Learning how to respect the value of money is a fabulous lesson, and it can be taught while they are still young. Giving them an allowance that is based on helping around the house, chores or anything else you choose teaches them that they need to work for their money. Because they’ve put in the work, the money holds more value, as they know how hard it is to earn it.
If you are unsure of what to establish as the chores or activities they need to do around the house, you’ll find plenty of sample chore charts online. And as for the amount of allowance they can receive, consider giving them one dollar per week, per their age. For example, if you have a seven-year-old child, they can get $7 a week.
Experts also suggest shifting to bi-weekly allowance payments for tweens and teens as this will prepare them for their likely pay cycle in their careers.
Savings Should Also Be Started at an Early Age
Just as an allowance can start at an early age, so can savings. You don’t have to open a savings account for this tip to be possible, as a simple piggy bank or jar is all it takes. Teaching your kids that a portion of the money they get should be put into savings will help them in their adult years. It means they will understand the importance of a slush fund to cover emergency expenses. It’s also important in terms of saving for retirement.
Discuss What Investing in Stocks Means
If your kids are a little older, meaning tweens and teens, this can also be a good time to discuss investing in things like stocks. The stock market can seem pretty overwhelming to those not involved, so why not dispel that apprehension from an early age so that if they are in the financial position to invest as an adult, they feel confident to do so?
One of the best ways to get in on the ground floor is by purchasing growth stocks. Typically, these are seen as a cost-effective stock to purchase, making it an attractive starting point. They offer the potential for impressive growth but are risky. You can start studying growth stocks with your tween or teen, tracking frequently updated growth stocks so they get an idea of how to spot a good one to buy.
Be Sure to Set the Example
The final tip is to lead by example. If you practice good financial habits regularly, then your kids will have an excellent role model to look to. They will see that you’re practicing what you preach and realize it’s relatively simple to adopt these tips. Your kids may even feel more comfortable coming to you with financial questions, as they will see you as knowledgeable on the topic.
It’s impossible to over-stress the importance of good financial habits in life, so teaching your kids from an early age is sure to benefit them.