7 Tips To Build Good Financial Habits
1. Talk About Money
Discuss things that cost money — both necessities and “nice to haves” — with your child and how saving is involved in getting those things. Younger children can start to learn about concepts related to savings accounts, earning interest, etc. Older children dive into concepts about credit, good debt vs. bad debt, investing, and so forth. The more you talk with your kids about important financial literacy terms and how they relate to their goals, the better!
2. Allow Some Trial and Error
Allowing kids to make small mistakes with their money can be a good learning experience. If your child decides to spend their birthday money on something frivolous, talk through how they might make a different decision next time.
3. Open a Bank Account
Starting with a piggy bank, cash, and coins is great for helping kids to understand money in a digital world where the concept of a transaction can be harder to grasp. As they get older, open a bank account and help them deposit their savings.
4. Model Good Habits
Involve your child when you pay your bills and set aside money for retirement, education, and other large purchases. When they observe your good habits, kids will not only be more encouraged to handle their own money wisely, they’ll also pick up useful tips along the way.
5. Encourage Sharing
Help your child determine how much to spend, save, and give away. Ask them what causes are important to them and where they would like to donate some of their money.
6. Save Up Together
Setting a goal and saving together for a vacation or joint purchase is a fun way to encourage saving. You might offer a match or incentive for your child’s savings.
7. Keep the Conversation Going
Think of your child’s financial education as an ongoing conversation. Continue to introduce new concepts, and check in on their savings progress. Celebrate when they reach a goal, and have fun along the way!