Knowing how to properly save and spend money is one of the most vital skills anyone can have. However, you’d be surprised how many people don’t learn what they need to know until they reach their late teens or young adulthood. As a parent, it’s critical that you teach your children the importance of saving money. In this post, we’ll be going over a few ways parents can easily instill good financial habits into their children.
Talk About Wants and Needs
In life, we’re going to see things we want and have things we need. However, the latter is and should always be the priority when it comes to spending money. Prioritizing wants over needs is one of the absolute worst habits people can fall into. What’s worse is how common it is. Parents have a huge advantage because of how impressionable children are. It’s the perfect opportunity to teach them the difference between wants and needs. If your children are younger, explain this in a way they can understand. Make it fun, so you can easily motivate them to try.
Let Them Earn Their Own Money
You can get your child motivated to make money by offering them to do chores around the house. Being given the opportunity to earn their own money to buy what they want, like a game, toy, or collectible can give them such a sense of accomplishment. In addition, it instills a good work ethic in them.
Help Them Apply for Their First Credit Card
As you’re aware, a person’s credit is the most important factor in their finances. It’s what ultimately dictates how they can get a house and apply for various loans. But if a score is low and not in a good spot, then it’s possible an application will be denied. So, the question stands; how do you help your child maintain their credit? Simple in that you help them apply for their first credit card. Credit cards can help your children build up their score while also making them more financially independent.
Because a credit card is such a responsibility, your children will learn that they can’t use it for everything that catches their eye. The money they spend must be put back within a certain time frame or else they’ll have to deal with high interest rates. If your child is a student with debt from their student loans, they cannot afford to struggle with the debt accumulated from a credit card. It should only be used for when they really need it.
Teach Them How to Budget
If there’s one financial skill that you must teach your children, it’s most certainly how to budget. Budgeting is your financial plan given form. It’s how people track their spending and plan out their monthly expenses. It’s also a tool for saving and investing money as well. Budgeting isn’t exactly as difficult as some people make it out to be. Sure, it’ll take some time to thoroughly plan out, but these days, it’s all digital. It’s no longer necessary to manually write and calculate everything each month. There are many reputable mobile apps who do the work for us. All your child needs to do is enter their information once and the app will take care of the rest.