The Top 8 Healthy Money Habits to Teach Your Kids
Maintaining a healthy relationship with money is important for everyone, regardless of their age. But when it comes to teaching kids about money, there are specific things that young parents can do to set them up for success.
Below, A. Fisher & Associates through their website Debt Relief Canada, breakdown the healthy money habits they believe children should be taught from an early age. Alongside aiding families beat debt, A. Fisher & Associates offer free advice and information on everything from improving your credit score to student loan debt.
Healthy money habits you teach your kids
Here are eight healthy money habits that you can start teaching your kids today
1. Start early
As a parent, you play a critical role in teaching your kids about money. It’s important to start early and instil healthy habits that will serve them well throughout their lives. One of the most important lessons is learning how to budget. This involves understanding how to save money and make wise choices with spending. You can help your kids develop these skills by setting a good example and providing opportunities for them to practice. For instance, you might give them an allowance that they have to use to cover different expenses. As they get older, you can also involve them in household budgeting decisions. With your guidance, they will learn how to make smart financial choices that will benefit them for years to come.
2. Teach them about needs vs wants
One of the most important money lessons for kids is understanding the difference between needs and wants. This will help them learn how to differentiate between items that are essential and those that are simply desired. Teaching this lesson can be as simple as having a discussion about it or involving them in budgeting decisions. For instance, when you’re grocery shopping, you can ask your child whether certain items are needed or wanted. This will help them start to think about how to prioritize their spending. As they get older, they’ll be able to apply this lesson to bigger purchases like houses and cars.
3. Help them understand the value of money
In today’s world, it’s easy to lose sight of the value of money. With credit cards and tap-to-pay systems, we often don’t even see the cash changing hands. This can make it difficult for kids to understand the concept of money. One way to help them is by using tangible methods of exchange, such as play money or coins. This will help them see that money is a real thing that can be used to purchase goods and services. You can also teach them about the value of different denominations and how to count them. As they get older, you can discuss the concept of inflation and how it affects the purchasing power of money.
4. Encourage them to save
One of the most important money lessons for kids is learning how to save. This will help them have a cushion for unexpected expenses and prepare for future goals, such as college or retirement. You can encourage your kids to save by matching their contributions or setting up a reward system. For instance, you might give them a dollar for every $5 they save. This will help them see the benefits of saving and be more likely to continue doing it into adulthood.
5. Help them develop good credit habits
Credit is a tool that can be used to finance big purchases, but it can also lead to debt if not used wisely. It’s important to teach your kids about credit and how to use it responsibly. This includes understanding things like interest rates and minimum payments. You can help them develop good credit habits by co-signing for a credit card or loan and teaching them how to use it wisely. As they get older, you can also help them build their credit by cosigning for a credit card or loan and teaching them how to use it responsibly.
6. Discuss the risks of debt
While credit can be a useful tool, it’s important to discuss the risks of debt with your kids. This includes things like high-interest rates and late fees. You can help them understand these risks by involving them in household budgeting decisions. For instance, you might show them how much money you would have to pay in interest if you carried a balance on your credit card. This will help them see the importance of only borrowing what they can afford to pay back.
7. Teach them about investing
Investing is a great way to grow your money over time. It’s important to teach your kids about the basics of investing, such as how to research stocks and diversify their portfolios. You can also involve them in your own investment decisions. For instance, you might ask their opinion on which stocks to buy or sell. This will help them develop an understanding of how investing works and why it’s a good idea to start early.
8. Help them set financial goals
One of the best ways to teach kids about money is to help them set financial goals. This could be something short-term, like saving for a toy they want, or long-term, like saving for college. Either way, it’s important to involve them in the goal-setting process. This will help them understand the importance of setting aside money for specific purposes. It will also teach them how to create a budget and stick to it.
These are 8 top tips for teaching your kids about money. By following these tips, you can help your kids develop healthy financial habits that will serve them well into adulthood.
April 25 at 12:33 pm
These are amazing tips. We started an investment fund early on and we made sure the kids are involved in the process and decision making.
April 25 at 3:58 pm
I definitely think teaching them the value of money is important. And getting money for doing work, like doing housework in order to get your pocket money etc. Some great tips here x
April 25 at 4:37 pm
Teaching kids the value of money from a young age is very important. It determines how they will handle money when they get older. When they know the value of money, they learn to prioritize their needs and wants.
April 26 at 8:08 am
I do with I’d have been given advice when I was a kid about finances. I was taught to write a check. That’s about it.
April 27 at 12:08 pm
Teaching Need vs Want is really challenging. Thank you so much for all of these tips, money really is important to teach children.
April 28 at 11:26 am
These are all such great tips and couldn’t agree more – good money habits are key to teach early on!