There doesn’t need to be any mysticism to being financially responsible, but sadly, this is a skill our younger generation doesn’t seem to be adequately prepared for. As a responsible and caring parent, obviously you want the best for your kids, including their happiness and success. In a money fueled world, part of that success will stem from being able to adequately manage their money and resources.
Instilling money sense in your children begins long before they enter adulthood and even before they enter the working world. It starts at home, based on your own money etiquette. Instead of independently making money decisions for your household, initiate a family conversation about goals and how the money would be best spent. Should you save up for a nice family getaway or would it be wiser to put that money toward a needed household expense like a new computer? Allowing your children to be a part of decision-making activities will show them first hand that everything worth having requires planning, dedication, and choice.
Make sure your children know the difference between needs and wants. Of course, the lines can blur from time to time; that’s when your parental responsibility comes into play explaining the clear line of distinction between the two. Financial dishonesty can also be a pitfall you expose your children to that can lead to bigger problems down the road. It may have seemed like a good idea to rob Peter to pay Paul, but sooner or later the debt will need to be satisfied. It’s best not to get overextended to avoid such scenarios as avoiding uncomfortable phone calls from bill collectors or dealing with the impact of poor credit ratings due to untimely payments.
You talk to your children about the pitfalls of poor decisions in efforts to safeguarding their well-being. You explain the potential danger of talking or going with strangers. You try your best to prevent them from experimenting with drugs and alcohol, in hopes of keeping them safe and healthy. As a parent, you never know which advice sticks and when you will find yourself looking for an outpatient rehab center; whichever the case may be, you still do your best to educate and guide your children to being wise and understanding the potential consequences of their actions. As with all of life’s lessons, some are learned easier than others and learning financial savvy shouldn’t take a back seat with regards to importance.
So what tools should you encourage your children to use to ensure their financial health as young adults? Make sure they understand the importance of a single dollar and how quickly they add up. It may only seem like only a $1 soda at the gas station but before you know it, those insignificant, possibly impulsive buys are turning into $20 a day if you aren’t mindful. That $20 a day then turns into $100 a week. By the end of the month, you can have mindlessly spent $400 without even batting an eye. That $400 would serve a much better purpose in the bank.
Explain the importance of keeping monthly, recurring expenses low. Whereas its more cost-effective to subscribe to a magazine versus paying the cover price each month at the newsstand, be mindful of just how many subscriptions you maintain. When you start to figure just how many monthly subscription services are out there, from Netflix to Amazon Prime, stop and consider which of these services are essential before you find that upwards of $250 a month can be spent on these services. Take the time to evaluate the big financial picture and make your decisions accordingly.