Teaching Financial Responsibility: The Best Gift You Can Give Your Child
Do you ever look back on your life and wish you could give your children a better experience? Most would opt to protect their children or to guarantee their success, but that is a huge burden to bear and impossible to assure. We’d like to ease your mind a bit- there are small ways to give your kids better opportunities by establishing financial wisdom early on. There is no need for a huge parenting battle when kids are going off to college if they already have the groundwork laid from a lifetime of consistency.
According to consumerfinance.gov, children are exercising their executive function muscles that build the foundation for future decision-making when they are ages 3-5. They are developing abilities to control their impulses and stay focused, which is absolutely crucial when it comes to their finances.
It may sound overwhelming to create this foundation in your children or grandchildren, but there are many easy ways to incorporate finances into a conversation that can remain at your child’s intellectual level. Whether it be discussing your job around your children, pointing out the occupations you encounter on a daily basis, or even encouraging them to play with toy money as toddlers, this can help them to understand the impact money has on a day-to-day life.
Never Stop Teaching
As kids get older, more complex topics can be introduced. Consumer Finance recommends implementing more advanced financial habits starting as early as age six. At this point, kids understand more about their surroundings and can build behaviors that will carry on into adulthood. Some great ways to incorporate this knowledge are to take it a step beyond the typical approach. Instead of just giving your child an allowance to spend each month, you could discuss what they plan to do with it or only award it if they complete certain tasks.
An excellent way to teach them about financial preparation is to set up a savings account for them at an early age and have them put a small percentage of everything they earn into savings before they can spend it. Lincoln Savings Bank’s T.A.D.s Kids Club account is a great option that makes savings easy for kids.
Once your kids are old enough to be making their own financial decisions or earn their first paycheck, you have the opportunity to ensure that the years of teaching will carry on. Sit down with them and analyze their first paycheck. Explain what it all means and the best way to use the money once it is earned.
Be a Money Role Model
Don’t stress if you don’t feel adequate- very few feel prepared to teach financial lessons to their families. What is important is that you teach your children through actions and consistency. Children are constantly watching and taking in new information from how you go about your day. Even using your own spending habits as learning opportunities can be instrumental in their development.
It’s an amazing opportunity to be able to teach your children financial wisdom. Don’t leave it up to your kids to figure out once they are on their own- put your children on a path to financial success by incorporating teaching moments throughout their lives. Need help? Talk to one of our financial professionals at any of our locations. We’re here to help!
Lincoln Savings Bank, Member FDIC