Financial success is not automatic. It requires learning a few basic money skills early in life. As parents, it’s up to us to teach, show, and discuss basic money skills to set kids up for financial success. Here are seven lessons you can teach your child to create a foundation for financial stability.
Involve your kids in creating and maintaining a budget because the older they get the more money they will want. Kids should know how money is spent so that they can be more sensitive to money fluctuations and limitations. When kids know approximately how much money is coming in and how much has to go out to maintain a life, they will be more sensitive to your role as a provider. Knowledge about financial obligations might encourage kids to find ways to earn money on their own.
Every child is born with the needs whether it’s eating, sleeping, or changing their diapers. Essentially they are takers. They take and take and take but it’s normal for that stage of life. It’s up to us as parents to teach them how to share and contribute to society. It’s not much different when it comes to money. The natural state of mind is wanting money but giving money is the cornerstone of financial success. There is a rule that says, the more you give the more you get. It is just how it is. Teaching your child to give not only helps the receiver, but it helps the giver feel a sense of purpose and satisfaction. When children are taught to donate to charity, return tithe, or volunteer their time, it positions them to receive and teaches them important lessons in generosity.
As important as it is to give, it is also important to save a portion of the money you receive. Everyone wants that special something. A new toy, a video game, or education. Teaching your child to save money teaches them self-discipline, money management, and gratitude.
Self-discipline, when learned early, is crucial for kids because they learn how to control their impulses. They will be less likely to be broke because they went on a shopping spree and spent all their money. They will know how to manage their money so they can handle larger amounts of money when they get older. They also feel grateful and proud of themselves because they see the fruits of their savings in the form of a big bank balance.
As parents it’s up to us to teach, show, and discuss basic money skills to set kids up for financial success.
Too many kids grow up, go off to college, and then graduate without knowing the important skill of paying bills. They are clueless about how to set up utility accounts for their apartment and how to pay their bills monthly. It’s not too early to begin sharing the household bills with your kids. It will not scar them or scare them to know how the lights, water, and internet appear in your home. These are all bills that must be paid in order to enjoy these services. It teaches them not to take the luxuries of life for granted. It also teaches them to expect the responsibility of paying bills when they are older. As they grow older, allow them to pay the bills in person and online. You might even give them the responsibility of paying the bills monthly so they are accustomed to doing the task. Their financial success depends on it.
Giving money, saving money, and paying bills requires an income. Instead of asking your child what they want to be when they grow up, start teaching them how to earn money and become a business owner. Some parents choose to give an allowance for chores. This is okay but chores are typically a contribution children should make as part of a family. Paying your children to do tasks that are above and beyond doing what they should be doing anyway may be more effective.
Pay them to wash the car. Show them how to mow the grass then go the neighbors and offer to mow theirs for a few dollars. Teach them how to take care of the family pet then use that experience to take care of other people’s pets in a dog walking service. They can start a cleaning service once they know how to clean their own home with expertise. Teach them how to leverage their skills into an income. The earlier they learn how to make money the better for them in the long run. They will have a head start on financial success.
In this day and age it is important to have multiple streams of income. We no longer live in the era of working for one company for 30 years then retiring with a gold watch. Having more than one source of income is a path to wealth and financial success.
Now that they know how to make money you can teach them how to create multiple streams of income. With the internet, creating multiple streams of income is easier. Your child can design and sell t-shirts online for his pet-loving clients. Your child can create a line of environmentally-friendly air-fresheners to sell to her cleaning business clients. There are hundreds of ways to create multiple streams of income. It works best when those income streams are related. Whatever they decide to do, remind them to have fun on the road to financial success!
Now that your child is making money they will need a bank account to deposit their money into. When they are young take them to the bank to set up a savings account. Usually, this account is attached to your bank account and is free to open. They can even earn interest on their deposits. When your child begins their business open a checking account and allow them to have a debit card. This is the perfect time to teach them deeper money management skills. The budgeting, giving, saving, and earning lessons are all used when they have a bank account. Reinforce their lessons with weekly check-ins to discuss how much they have earned, how much they are saving, and how to budget the rest. With these practical lessons, they can’t help but be financially successful because they are learning how to make sound financial decisions now instead of later.
Setting your kids up for financial success may feel overwhelming at first, but with these basic lessons, they will learn what they need to know. Kids learn by doing and often follow your example. How you handle money is likely how they will handle money. If you are struggling, now is the time to get on track so your kids will have a positive financial destiny.
There are plenty of books to read about money management, starting a business, and investing. Commit to reading at least one money book per quarter or month to learn and practice the activities. Pass the lessons down to your kids so they also know what you know. This is the stuff financial success is made of!
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