We parents are responsible for imparting on our children numerous life lessons, teaching them about money and building wealth is one of them.
The way parenting works you can’t say one thing and then do another…
What do you think happens when a child observes the following behavior:
- Every single dollar you earn, you spend
- You owe thousands of dollars to the bank, credit card company, the government, etc. and are doing very little or have given up hope you will ever get out of debt
- You have little or no money in savings and your idea of an emergency fund is FEMA
- You buy stuff with money you don't have i.e. credit
- You spend more time planning what you are going to wear than your finances
Well, if you have any of these poor money and wealth habits and you are a parent, guess what you are teaching your children about money?
You are teaching them to do the same...whether you like it or not.
But it does not have to be that way...because we have all been given the power of choice.
You can choose to change your money habits. You can choose to get out of debt and build wealth and you can choose to teach your children about money and how to handle it.
If a wife and mother is always telling her daughter to "ask dad for money because I don't have any", what are you teaching?
You are teaching your daughter that women don't have any money, men do...
If a son asks his dad to buy him the latest widget and dad obeys and buys it, you just wasted an opportunity to teach about savings, budgeting and rewards for good behavior.
It is these everyday money situations that help children learn about money and wealth. The following guidelines can help you change your financial family tree:
- Lead by example – behave with money the way you would like your child to. Spending less than you earn, saving, budgeting, investing etc. These are all behaviors that children will learn from you.
- Use teachable moments - if grandma gives them $40 for their birthday teach them to spend some of it on whatever they want and also save some. Look for everyday situations where a child is handling money and use the situation to impart a lesson.
- Involve your children in your household finances – walk them through your household budget, show them the water/gas/power bill so they see how much things cost, let them see your paystub and show them how much you are putting into your 401k and savings account every month, etc.
- Teach them about money, investing, budgeting, planning - give them four jars labeled spending, saving, donations and investing. Then every time they get any money they can divide it between the four jars. This simple budgeting method will get them started with a core tenet of personal financial planning.
- Let them handle money as soon as appropriate – you can start them off with a small allowance and setting rules for earning that allowance. As they grow up you increase their allowance and their opportunities to earn money by doing work and helping out. Explain to them the principles of building wealth
- Help them set financial goals – whether it is earning and saving money to buy a video game or saving for a car or college tuition, setting financial goals is an invaluable wealth building skill.
- Teach them how to earn money (and it's not always through a job) - whether it is getting a couple of dollars for doing a simple house chore or starting their own business, help them understand the numerous ways of making money.
QUESTION: What money habits/lessons that you learned from your parents has been most helpful to you?
photo credit: barockschloss via photopin cc