Most parents know that good spending habits are something that’s going to follow you for the rest of your life. In yet, with how busy we can all be, it’s hard to sit down and really figure out how to teach our children not to make the same financial mistakes we might have. Granted, almost everyone in their lifetime will go through some sort of financial hardship, but it’s good to implement the right foundation to get them off on the right foot.
Believe it or not, most kids are at a huge advantage when it comes to setting their financial goals than previous generations. The amount of information and resources out there to start setting up a plan are endless, but it can be tough knowing where to start. However, not to worry as we’ve compiled a few helpful tips as to how you can work with your child on their financial future. I know it’s probably not a conversation they’re eager to have, but doing so will not only set them up for success, but give you a piece of mind as well.
Establish a Savings Plan
Perhaps one of the biggest things that you can teach your children is how to save money. While most of us to a certain degree wish we saved more, instilling this idea is imperative for them to have financial success in the future. More, it’s becoming more of a trend to utilizing technology to help with saving. Banks like Simple, for example, have features that help set saving goals for future events.
The basic idea here is that your children start looking at the future benefits of money rather than the short term. While going out with their friends for one night might seem like fun, try educating them on how much better it would be to put that money aside for a special event, vacation, or even music festival. Putting it in terms that acknowledge you understand the lifestyle they’re trying to achieve will serve both you and them well in the long run.
Acknowledging That Debt Is a Part Of Life
A lot of young people ignore their debts, which is a terrible habit. Even though that most of us admit that yes, having debt is a part of life and that isn’t necessarily a bad thing, it’s hard to explain to your kids that this stuff will follow you forever. While no one wants to encourage their children to get in debt, try explaining to them the difference between ‘good debt’ and ‘bad debt.’ Go through the different types of loans and lines of credit they can take out, what’s a good rate, and how to establish a realistic timeline to paying things off. I know this is a conversation no kid wants to have, but trust me, they’ll thank you one day for it.
It’s Never Too Early To Invest
Another financial habit many parents overlook is encouraging their children to invest in long-term index funds. This can not only be a great money saving technique but something that teaches them about the stock market too. Plus, there’s plenty of great apps that can help get anyone started with investing. It might seem like that only ‘adults’ or rich people do, but anyone has the power to make money from the stock market if they play their cards right, and it’s important to teach that game early to avoid common mistakes.
Nipping Bad Habits Before They Start
If nothing else, this is one of the most crucial things you can teach your children early. While it’s fun to do things like go out to eat and whatnot, it’s been reported that a lot of young people spend entirely too much doing so. I’ll admit that unfortunately, this comes a lot from the parents (especially if they don’t cook themselves), but it’s never too late to start learning. In fact, this could be an excellent opportunity to not only pick up new skills yourself, but spend quality time with your children. For example, if you both figured out how to change your oil or even signed up for something like Blue Apron to learn how to cook. I know not everyone is cognizant of how these behaviors can impact their child’s future, but you’re their biggest teacher. And believe it or not, you can learn from them as much they can learn from you.