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How to Prepare Kids to Handle Finances

When it comes to passing down wisdom to our children, money should be part of the ongoing conversations in making good life decisions.  Whether you have money or not, there has been a path that has lead you there, so it is good to explain the choices that you made, and what you can recommend for your child to do to, either follow in your footsteps if successful, or avoid if not.  After all, we want our children to strive to do better than us, as our parents had hoped as well.

Lead by Example

Like with most traits that you carry in life, you are influenced by family and friends whom you trust and look up to.  Whether it is giving back to the community or being a great friend that is always there when you need someone, leading by example is important to maintain that the same positive traits are passed down to the next generation.  You often see players looking up to the captain of the hockey team for on and off-ice behavior, well the same can be said for passing on good financial decisions to the next up and coming money decision makers.

Budget for Purchases

Instead of just going around town blowing all of your paycheck, leaving you with nothing until your next direct-deposit, if you are looking to make a purchase in the near future, it is smart to start saving now.  By teaching your children to budget for purchases based on the amount of income that comes in and goes out for necessary purchases, the remaining money that is leftover can be used to save for upcoming purchases, which teaches the need to save for wanted items.

Use Cash Instead of Plastic

A good way to teach the value of a dollar a little more is to put away the plastic and use cash for purchases.  These days we use credit cards so much, that with their virtually endless credit limit, there’s no real hard stop to cut off spending money, unless you either have willpower, discipline, or you reach the credit limit.  If you can bring back that feeling of seeing cash leaving your hand and going into the cash register, maybe you can teach the importance of purchase decisions, instead of just swiping a card.

Explain Credit Card Mistakes

Speaking of swiping a card, maybe it is a good idea to explain and credit card mistakes that you have had in the past, or if you have been fortunately responsible, go over what can happen you are irresponsible of which can lead to credit card mistakes.  From going into debt, paying interest, to possibly ruining credit, having the responsibility of a credit card is not for everyone, and is not to be taken lightly.  Charging up and not being able to pay right away could lead to years of debt.

Preach Organization

No matter if you are planning a trip, making a list for the grocery store, or hosting a dinner party, being organized will not only allow you to be successful in life, but can lead to good financial decisions.  By paying bills on time, buying what you can afford, and allocating enough funds to be put towards necessary purchases as well as saving, being in charge of the family finances definitely takes being organized.

Learn the Value of Price Comparison

Back when we were kids, I remember my parents looking for deals by going from store to store and comparing prices.  The problem with that is that it could involve spending the entire day going across the city to try and save a few bucks off of an item.  After it’s all said and done, was it even worth spending all day, after all, your time means something.  These days though, there is all the more reason to try and compare prices.  You can bounce from site to site in a matter of seconds, so you can spend a few minutes looking instead of all day.

There is no “I” in Team

It’s always a good idea to loop in friends or family that you can trust for advice for financial decisions, not to mention a professional.  Handling the finances is an important job, so whether you have a significant other, kids, or are handling solo, it is always a good idea to bring in another option to make sure that you are on the right track for financial independence, which involves reducing expenses and saving for the future, all while staying out of debt.

Comments

  1. Make like my father and mom did to me — give me some money in my teens, then tell me if I want money go to get a job. No need to over complicated it.

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