As parents we want to see our children dream bigger, go further, and accomplish more than we ever imagined for ourselves. While we are working to secure a better future for our kids, we should make it a priority to teach them the life skills of financially literacy and money management. Here are some simple, practical tips that you can use to start raising financially responsible kids:
Start with a Savings Account
Building a solid financial future starts with the principle of saving more than you spend. While we all know that we should be setting aside money for things like emergencies, retirement, or college funds, most of us don’t. Nearly 70% of Americans have less than $1,000 in their savings account. This unhealthy trend has to end.
Many banks and credit unions have special savings accounts available to children and teens designed to help build the habit of saving. These accounts can be opened up by young people with their parent’s signature and a small initial deposit, usually around $25 or so. If your child earns an allowance or has a job, have a conversation with them and stress the importance of paying themselves first before they go out and spend money on frivolous things. Your influence can help them build lifelong habits that will benefit them in the future. For example, help them set aside 10 – 15% of every paycheck and take them to the financial institution to make the deposit. As they regularly make deposits and watch their account grow, they’ll begin to understand the power of saving in real time.
It’s best to start building these money saving habits with your children early on in life. Research shows that people who learn good financial habits as children tend to handle money better as adults. Even if your child is in their teens or recently started college, it’s never too late to start applying the foundational skills of saving, budgeting, and planning for the future. These habits take time to form, so start today if you haven’t already.
Learn the Power of “No.”
One of the hardest things to do is to tell your child a simple two-letter word: “No.” While it pains us as parents to deny our children their wants, it’s important to teach them the importance of delayed gratification and self control. A big part of financial responsibility is developing the discipline to say “no”, even when we don’t want to. If they learn this lesson early on they’ll avoid a lot of common financial pitfalls like impulse shopping, excessively eating out, and spending money from that savings account they worked so hard to build, as well as reaping other residual benefits like higher test scores and greater potential job earnings.
We owe it to our children to set them up for financial success the best way we know how. Thankfully, you don’t have to go it alone. Operation HOPE is dedicated to building the next generation of entrepreneurs, financially savvy citizens, and wealth builders. We help walk alongside you and your kids through great programs like HOPE Banking on Our Future and HOPE Business in a Box. Check with your local HOPE Inside representative to get your children signed up or click here to learn more.