Help kids develop good financial habits

Thursday, July 25, 2019

One of the goals of parenting is to help teach your children how to be successful and happy adults.

Since making smart financial choices is critical to a successful adulthood, it’s important to start teaching your child about healthy spending and saving habits early.

Here are a few ways to breakdown the big concept of “financial responsibility” into easier steps for your kids.

1. Let your kids join the conversation.

Start by sharing the basics of your household budget. Explain the idea of paying for the “needs” before the “wants” without getting into actual numbers.

Let your child know early on that there are limits to “fun” money; for example, sometimes you might need to skip going to the movies now so you can save for a trip later.

When you go by the bank or pay bills online, take a moment to explain these routines. Most importantly, allow your kids to ask questions!

2. Try an allowance.

Giving your child an allowance can help them understand the spending power of their money.

Tie chores or other activities to an allowance or create a list of nonnegotiable chores that need to be completed weekly to earn a lump sum.

Some families might choose to give an allowance without requiring chores, and instead base it on school performance, citizenship or any other criteria. Choose which option fits your family best.

3. Let them make purchase decisions. If your child gets an allowance, it’s a great idea to let them choose what they spend it on.

Let your child go to the store and see the price of something they’d like to buy. Then have them count the money they have. From there, help them understand their options. Do they have enough money or do they need to keep saving? Will they have any money left over? Is this item worth what they’re giving up?

Helping your kids think through these give-and-take decisions will benefit them in the long run!

Equal Housing Lender - Member FDIC

Wendy Hayes is with Montgomery Bank in Cape Girardeau.