WELLthy Ways to Teach Your Child Smart Money Habits has been our passion once we became parents understanding that our children’s financial literacy falls mainly on us. Hubby was raised by a single mom of six who taught him the importance of saving and delayed gratification. I was also raised by a single mom of six who taught me that you live only once and enjoying life with things money can buy were far more important than planning for tomorrow.
When I started my professional career, I was simply glad to get a paycheck to pay my bills and spend the rest without a care for tomorrow. There was a mention of 401(k) during my training but I was too focused on enjoying today to take advantage of free money. Hubby started his professional career living below his means, saving at least 10% of his money, giving at least 10% of his money at church, investing smart in his 401(k) and buying stocks. When we got married, we paid for all our expenses cash thanks to Hubby’s smart money habits and it reinforced how important I wanted to start embracing a smart money habits lifestyle.
Our first year of marriage was tough because we had to learn to live on one income but it was the best year that set the foundation for our marriage and finances. We had to learn how to find a blissful medium of spending and saving and as tough as it was in the beginning, we made it work. We thank God for opening the communication lines to remind us that we are part of the same team and to look at the big picture.
WELLthy Ways to Teach Your Child Smart Money Habits is an important part of training our children to get a better start financially because we are aware that there is no shortage of statistics on the sad state of formal financial education for children and we did not want our children to fall victims of that sad state.
According to the Council for Economic Education, only a third of U.S. states require high school students to take a personal finance class in order to graduate. One in five 15-year-olds in the U.S. lacked basic financial literacy in 2017, according to the Program for International Student Assessment, a global exam that measures knowledge in areas such as math, science and reading.
WELLthy Ways to Teach Your Child Smart Money Habits is our way to fight the sad state of formal financial education for children starting at home. We started getting our girls involved in our budget when it came to groceries. Being a work at home mom, I understood the importance of getting them involved starting with a weekly meal plan and a shopping list.
When we get to the register after shopping, I make a point to explain to them that the only reason I can swipe my bank card is because I make sure that I have the money first. I also explain that we only have one credit card that we use when needed and we make sure to pay what we owe when the bill is due. We want our girls to grasp that credit means borrowing from others and comes at a cost. However, they also need to be taught that credit can be a valuable tool to be used responsibly.
WELLthy Ways to Teach Your Child Smart Money Habits start by being able to distinguish between a need, what is necessary to have, and a want, what is nice to have. It’s imperative to make our children understand spending money on needs first like food, shelter and clothing. Meanwhile, nice to have purchases, such as toys and vacations, should be purchased only after needs have been met.
WELLthy Ways to Teach Your Child Smart Money Habits can be built on the foundational financial lesson that every child should learn how to wait to make a purchase. Practicing delayed gratification creates the self-discipline needed to save money for retirement, college and other expenses as they become adults.
Parents can help children develop the skill by not purchasing every item they request. Even more powerful may be avoiding impulse purchases yourself and explaining to children while shopping that you’re not buying something you might like because you don’t need it at the moment.
WELLthy Ways to Teach Your Child Smart Money Habits is teaching our children that money has a time value. We opened a saving account for each girl and help them track the growth of their money. Our girls are understanding that thanks to compounding interest, money saved or invested over a long period of time has the potential to grow significantly.
We encourage our children to be creative to generate extra income and one way our girls do so is to return our empty water bottles to the store. We apply our family version of 401(k) by matching their returned bottles earning 100%. Our girls find various ways to save throughout the year with birthday money or commission (we don’t believe in giving our girls allowances but they can earn a commission because we want to teach them a more realistic vision of how money is earned in the real world).
WELLthy Ways to Teach Your Child Smart Money Habits isn’t about a single conversation at the kitchen table but it’s about teaching by example and making our children active participants in building smart money habits every day because whether we want it or not, as parents we are teaching our children money habits by our behavior and being intentional in setting our children on the winning path should be a lifelong investment.
Starting them on the right path financially is a gift that keeps on giving. I wish that my parents had spent the time to discuss financials with me early in my life!