Just as with many other life lessons you will teach your kids, it is important to instill sound money management principles in children. As you attempt to instill other good habits in your youth, do not ignore a vital ingredient: financial awareness. Many children grow to adulthood, lacking the skills and ability to handle money. This can lead to years of unhappiness and hardship.
When teaching your children about money, begin early. The sooner your children develop awareness, the better they will understand the realities of the financial world.
It should go without saying, but your best bet is to lead by example, practice what you preach. You must display financial soundness. Whether you realize it or not, your children pay close attention to what you say and do. Chances are they will model their behavior after yours.
Save gift-giving for special occasions. Though generosity may seem like a good quality, dumping extra money into their hands, without adherence to a budget, can send mixed messages.
Allow children to control their own discretionary spending. If a child is to learn about money, he or she must sense some meaningful connection to it. Though the parents should advise their kids on sensible spending and saving, they should not dictate how their offspring handle their earnings. The decision should be theirs, on how money received is to be spent, or saved.
If there’s one common mistake when it comes to raising financially responsible children, it is an inability of many parents to properly regulate their own financial lives. Prior to the age of about twelve the average child lacks exposure to finances, except for whatever involvement the parent or guardian generates. Regardless of your own current situation, the way you handle your finances is critical in securing the future financial success of your children.