Teaching Your Children Good Financial Habits
Studies show that children who grow up in families that discuss good financial habits, grow up to have better financial skills as adults. It's up to you to decide the right time to teach your children about money and finances; some experts say as early as five.
Family money discussions
Try discussing family financial matters so that your children can hear how you think about money. You may want to talk about things like evaluating an expensive purchase, such as a house or a car, how much daily items such as groceries cost and budgets.
This is a good opportunity to explain how much things cost to run a household. Your children can start to understand how money that comes in to the family pays for items they might not have considered, such as electricity, water and cable.
Giving a child an allowance not only provides him/her with the opportunity to learn about the value of money, but also budgeting and saving for something you need instead of instant gratification. Saving for what you want is a great life skill.
Opening your first savings account is a rite of passage. You'll want to help your children evaluate which bank or credit union and type of account is good for their needs. Look for accounts with no minimums and low fees.
As your children get older they will want, and sometimes need, a credit card. This is a great time to discuss debt, interest rates and spending.
A current and popular trend parents face is the expectation to pay for the full amount of their child's tuition. For many families, this is a financial burden that could be eased by setting expectations that their child can work to help pay for part of her/his college expenses. It is not unreasonable to expect teenagers to get summer jobs and save part of their earnings for college.