WEALTH HUB JOURNAL

How to teach your kids good money habits?

We all want the best for our children, so of course, we want them to succeed financially. That doesn’t mean you want them to have a yacht and a mansion by 30. Most likely, you just want them to be financially stable and secure. You want them to have a healthy attitude towards money and avoid making damaging financial mistakes.

But how can you ensure your children find financial success? The same way you teach them healthy eating habits by feeding them a healthy diet from an early age, you can teach them smart financial habits from an early age. Since kids don’t deal with money very often, it might not be obvious how you can do this, but fear not. It’s never too early to teach your child skills they’ll use for the rest of their lives. Here’s how.

Pay your child an allowance for designated chores

This is a tried and true method of teaching children the value of money. You may not see it fit to pay your child for helping out around the house, but the real reason you’re paying them is to teach them an invaluable lesson. Getting paid for hard work instills a strong work ethic and respect for the value of money. If you don’t want to give your child an allowance, encourage them to help out friends, family, and neighbours with odd tasks in exchange for cash. Your child having a bit of money also gives you a chance to teach them the importance of saving.

Teach your child how to use debit and ATM cards

Debit or ATM cards are a great way to introduce your teen to the world of responsible spending. The action of spending money without seeing it physically leave your hand is important for your child to experience and get used to.

Discuss establishing credit and the importance of borrowing wisely

Credit is yet another oft-neglected area of financial literacy with children. Once your teenager gains some experience using a debit or ATM card, broach the topic of credit cards, what they are useful for, and how they can be dangerous if not used prudently. Talk about credit scores and how can they impact, positively or negatively, many of their future financial and life milestones.

Show kids how money can grow

As little as money is discussed with children, investment is discussed even less. It’s considered a very “adult” subject and therefore not seen as necessary to teach to children or even young adults. Open a custodial account for your children (with a brokerage like Charles Schwab, E*TRADE, Fidelity, or Stockpile) to show them how an investment works. Once they learn how their money can grow from the practice of saving and strategic investment, they’ll likely be motivated to continue handling their money wisely.

Show kids the value of giving

Emphasize that money isn’t all about wealth. Money is power. It not only gives you the capability of living the life you desire; it gives you the capability to make a legitimate difference in the lives of others. Encourage charitable giving, as well as informed and intentional spending.

Model smart financial behaviour

As much effort as you spend trying to teach your kids about money, it’s likely they’ll learn just as much from what you do as what you say. What’s that saying… “Do as I say, not as I do?” Yeah, that may not work with your kids. Instead, try to exhibit good financial behaviour at every turn.

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