7 Tips for Raising Financially Savvy Kids
- 3 min
What you'll learn.
- When should you discuss finances with your kids
- How to prepare them
- Tips for them to start saving
Some of the best habits start when they are learned from an early age, and that’s why we’ve compiled a list of the seven most effective ways you can teach your children about fiscal responsibility as they grow up. These focus points will hopefully better prepare your children to enter the real world with a better grasp on the value of a dollar – and how to best manage their financial resources.
1. It’s never too early to start.
While some may find it taboo to discuss finances, it’s never too soon to start talking about the fundamentals of financial wellness, such as earning money, setting goals and saving, building credit, and setting a budget. The more your little ones know, the better-informed they will be when it comes to making major financial decisions down the road.
2. Discuss building credit at an early age.
The more mature and healthier one’s credit history is when they go to make monumental life moves like buying a car or a first home, the better! Talking about what credit is, how it is positively and negatively impacted, and discussing ways to build credit can be very eye opening and empowering for a young adult.
3. Set savings goals early on.
Working toward a goal of any kind is undoubtedly a great lesson for a child, and adding a financial component requires an additional level of diligence and maturity. As one begins to see how long it takes to save enough money to buy this or that, the more they begin to understand the value of a dollar – and to save and spend wisely.
4. Don’t give a weekly allowance.
Paying out a set weekly allowance has the potential to teach that money is expected rather than earned. Instead, maybe consider paying by task or project. That way kids understand that work and effort correlate to money earned. And though they may not grasp the concept completely in the moment (depending upon their age), it’s something they’re sure to look back on as a source of financial wisdom.
5. Teach your kids the lesson of delayed gratification.
Hey! We’re all guilty of it. Impulse buys next to the register or the ever loved “You might also like this” feature upon online checkout… we get it. Maybe we could all take a few notes in the lesson of delaying gratification in order to focus on financial goals. Talking about the difference between a want and a need – and how to save for the wants while avoiding the unplanned splurges can help them work toward financial goals more easily.
6. Emphasize the importance of setting a budget and sticking to it.
A big part of fiscal responsibility is learning how to manage funds wisely. The lesson of never spending more than you have is a core lesson in finance that can be taught from a young age. For younger children who may earn money here and there, talk about how they can budget X each month; maybe it’s a monthly movie trip or film for their Polaroid camera. For teens who work, teaching them to write out an income vs. cost analysis would be very practical and applicable. How much money is coming is versus how much money is going out – being spent on gas, a phone bill, fun with friends, and so on? Regardless of their age, it teaches them to anticipate costs and set money aside to cover them.
7. Talk about safe and responsible ways to earn money.
Between weekends, holidays, and seasonal closures like spring, summer, fall, and winter break, kids have a decent amount of time to earn money throughout the year. From helping neighbors with yard work, to washing cars to even starting their own business because they have a great idea or talent – having parental guidance on safe and responsible ways to learn money is always a necessary and appreciated life bumper.
With so many great resources available nowadays, there are a variety of ways to apply these seven lessons to different life circumstances and goals that best fit your family! We look forward to continuing to partner with you and the communities we live and lend in – and beyond, to raise financially healthy and educated children for generations to come!