7 Great Financial Habits to Teach Your Kids

Many parents do a great job at teaching their kids manners, respect, and to study while in school. However, there’s no shortage of parents who fail to go out of their way to teach their kids great financial habits. That really needs to change.

Here are 7 financial habits to teach your kids.

1. Importance of Saving

From a very young age, there’s no reason why you can’t teach your children the importance of saving money. Fortunately, it’s easy to do when they’re little.

Ask them to do a little extra work for dimes or nickels. Then, teach them to save those dimes and nickels that they’ve earned. After a while, show them how many dimes and nickels they’ve saved because they didn’t spend them. As they get older, kids can save their allowance to buy something for themselves that they really want.

2. Budgeting

Older children don’t know how to raise a family on a budget. However, they can learn how to budget the money that they do have.

Sit down with your kids who are earning a steady income and go over all their expenses and income with them. Then, help them develop a budget that keeps them from overspending their hard-earned cash.

You can also include them in conversations when you do your own household budgeting so they can learn from your example.

3. Consequences

When your kids have made a decision to do something, make sure that sometimes they can’t change their minds.

You can practice this principle with simple things. For example, you can ask your child to select the main course for dinner one night. If he or she has a change of mind later, stick with it anyway. That will teach your child that some decisions can’t be undone. That’s especially true when it comes to financial decisions.

4. Investing

When your kids are old enough to understand, teach them about investing. Help them understand about principles like risk and reward and that they can earn or lose money when they make investments. Encourage them to practice trade with an account that doesn’t use any real money.

5. Minimize Their Exposure to Ads

Kids often love what they see on television. They might be tempted to spend a sizable chunk of their latest allowance on a new toy that they saw advertised during one of their favorite shows. Reduce the temptation to waste money by limiting their exposure to TV ads.

6. Comparison Shopping

Your kids might think that when they see something for sale at one store, then that’s the price it is at every other store. That’s actually an understandable sentiment, but it needs to be corrected.

Teach your kids that some places sell things at a lower price than others. Also, let them know that sometimes products are “on sale,” meaning that they’re sold at a discount to their normal price.

7. Economies of Scale

Teach your kids that they can save money often by buying in bulk. You can demonstrate that to them by taking them shopping to one of the “club” style stores where most things are cheaper, per unit, because they’re sold in large quantities.

Also, let them know that you can sometimes “bundle and save” as with cell phone family plans. That will keep them always looking for deals.

You want your kids to do well in life. Give them a helping hand by ensuring that they get a good financial education.