The greatest legacy any parent can leave a child is the ability to manage money responsibly. Sadly, if the debt statistics in America are any indication, most of us are not learning this valuable lesson from our parents. It doesn’t have to be this way! Here are some tips for helping your child learn how to manage money.
Learn to Respect Money
Since most of us live where bartering for what we need to exist is no longer feasible, money is an absolute necessity. That said, it’s also vital to have a healthy respect for it. Money is a tool to be used carefully and managed wisely. My experience has shown that it’s much easier to get into money trouble than it is to get out, so it’s best not to get into money trouble in the first place. This is a valuable lesson for children of any age.
Lead by Example
The best way to teach your child a healthy respect for money is to lead by example. If you show your child you have the discipline to plan and work towards a money goal, chances are they will learn a very valuable lesson from your actions. Live within your means and don’t covet what others have. A little tough love here – I don’t mean to sound preachy but it’s really that simple! Show your children that you’re content with what you have and they will learn that it’s possible to live a happy life without the overwhelming need to buy things.
Social Media Influence
Do you ever see people on social media at their worst? Very few of us share our troubles publicly – we only share what we think is our best self. Why would anyone want to share their faults?
While your child sees their friends with their stylish clothes and ridiculously expensive shoes, what they don’t see is what it takes for them to pay for these things. They don’t know if their friends (or their friends’ parents) are going into debt to pay for such a showy lifestyle. The most valuable lesson they can learn here is that character counts much more than material goods in the long run. I fully acknowledge that this is very easy for me to say – trying to convince a child that they don’t need the $100 shoes they see their friends wearing can be exasperating but it’s a battle worth fighting. Your 35 year old adult child will thank you for standing up to their 16 year old self.
Balancing a Checkbook
From the time when Hubs was in the military stationed in Germany I can still remember some of the commercials that aired on Armed Forces Television. One of the most memorable shows a soldier standing at the bank counter wondering why there’s no money in his checking account. There’s checks in the checkbook – surely that means there’s money in the account, right?
Are you balancing your checkbook regularly? Back in the day you had to wait for your statement to arrive and use the worksheet on the back to balance your checkbook. With today’s technology it’s now possible to balance your checkbook daily if you want to. While that may seem a little OCD I wouldn’t scoff at the idea of balancing your checkbook at least 2-3 times a week, especially in this day of the identity thief. Balancing a checkbook is not difficult – follow the steps shown here to learn if you don’t know how and to teach your child, as well.
Set up a Savings Account
If you choose to pay your child an allowance or they’re old enough to have a part-time job, open a savings account for them. Make it a requirement that they set aside a percentage of their earnings. The amount isn’t as important as the habit. Paying themselves first will become a priority and in no time they’ll have a rainy day fund in place for when they set out on their own.
If college or trade school is in their future, a 529 plan is a great way to save for their education. Offer to match their contributions and they’ll not only learn the value of the savings habit but they’ll probably do better in school, too. I know this from experience – I did MUCH better in school when I was paying for it. (Sorry, Dad!)
What are some lessons you’ve taught your children about responsible money management? If I haven’t covered them here I’d love to hear about them – please share in the comments.
Be well and God Bless – until we meet again…