It’s never too early to start teaching your children healthy habits, and that includes financial ones. Children pick up on our attitudes about money just by watching us. Here are five money-related habits that you can start teaching them right now. (The first two are aimed at the very young; the rest are for ages 8 and up.)
Model good financial behavior
Children watch their parents and replicate many of their habits. What are your children learning from you about money? Be mindful of your spending around your children. Are you and your partner always getting the newest gadgets, cars or items for the house? Do you eat out a lot as a family? If so, your children are likely to develop an “I want it, I can have it” financial attitude.
Make them wait to buy things they want
Learning how to delay gratification is a much-needed skill in today’s “have it now” society. Teach your children from an early age that when they go to the store with you, they don’t always get to leave with something. If they can’t stop talking about that new toy they want, tell them they can ask for it for their birthday or Christmas, or let them earn money by helping out with chores around the house.
Teach them to save for the long term
A great way to teach children about saving is with the rule of thirds. When your children get an allowance or money for their birthday, have them put one-third into a long-term savings account like a 529 college savings account and one-third into a savings account for a bigger purchase like a bike or iPhone; the final third may be spent immediately.
Teach them how to compare price, features and quality
You can take your children shopping with you and compare prices with them on a variety of items so they see the value in what you can buy. When you go shopping for back-to-school, set a budget and have them get the clothes they need — within that budget. Teaching them about comparison shopping while they’re young will help make it a habit, so it becomes automatic as they get older.
Let them learn from their early mistakes
If your child saves up enough money for something you think he will regret buying later, let him buy it anyway. Kids will remember spending their savings on a toy they used only a few times and may make different choices in the future. It’s better for them to learn consequences now than when they are older and the consequences are much greater.