Financial parenting is a critical part of raising your children. As parents, one of your main objectives is to prepare your children for a life of their own. Parenting is not all about the material things you can give your children. It has a lot to do with helping them find their passion in life and helping to mold them to be the best version of themselves.
Part of the process is guiding them financially as they grow up. This will help them be better financial managers of their own money when they get older. As parents, you are their first teachers in life. Even before they step foot in school, they have already learned a lot of lessons from you as parents.
Financial parenting is a lot more needed now since times are getting a bit more complicated than before. You get in debt a lot faster than when you try to get out of it. Higher education gives you an edge when looking for work but it costs a lot of money. Nowadays, it is also much more challenging to stay in one company where the transition can affect your finances.
These are just some of the reasons why you need to make sure that you are able to teach your children about proper financial management. They will have a better chance of staying out of crippling debt and pursuing their goals in life. This is because debt is very prohibitive and can hinder any plans your children might have in the future.
Your financial habits can be picked up by your children
Financial parenting does not mean you have to sit them down regularly to lecture them about money management. At a young age, they might not appreciate it and could even resent you for it. One thing you need to understand when trying to teach your children something is that your actions carry a lot of weight.
Even before you try and start to teach your children how to manage their finances well, you need to audit how you do yours. It is important that you have a good grasp of the basics. This will help build a strong foundation which your children will use as they grow up. The better their financial foundation is, the better their chances of managing their money wisely.
As you do this, watch how you manage your own finances and the habits your children might pick up. It will not matter how often you remind them to always save money if you always shop for things you do not need. Your children will notice and put more weight on your actions compared to what you say. Pay closer attention to your financial habits so you do not send your children mixed financial lessons.
Your financial influence can last for a long time
Financial parenting should be done to benefit your children for a long time. You might not realize it but your influence as parents will stay with your children up until they have lives of their own. They will start to unconsciously make it a part of their own financial management approach. This is why it is important that you set them off on a straight path.
What can you do?
As you now understand that teaching children about proper financial management starts from you as a parent, here are a few things you can do to help your children manage their finances better.
Financial parenting means including them in budgeting for your expenses
One of the easiest things you can do to help your children learn how to manage their money in the future is getting them to help with the household budget. To start with, you can show them how you budget your income as you pay down different financial obligations.
One thing you get out of this is that your children understand the need to pay your debts every month. Regardless how much you make a month, it shows that you have payment obligations every month. When your children see and understand this, there is a bigger chance that they will prioritize payments as well when they get older.
You can even assign a specific item in your budget to your children in terms of monitoring them. You can ask them to monitor your utilities and be on top of the cost. They can now make sure that lights are turned off when no one is in the room or turning off appliances when not being used. This way, they are able to be more conscious of how their actions directly affects their finances.
Help them earn their own money
Financial parenting can also be done in a way where you help them earn money. Now, this is a debatable topic, especially where other parents point out the need for children to do chores at home. The idea is that children need to understand that there are things they need to do at home for the family. When parents start to pay children to do chores, they would start to think that they have to be paid to do them.
One compromise can be paying them if they do more than what they are assigned to do. If their chore consists of cleaning the yard but they make an effort to clean the garage as well, then they can get paid for that extra chore. This way, they get to understand that there are things they need to do for the family but they can make some cash if they do more than what is asked.
You can also help them with ideas on how they can earn some extra money. If they mow your lawn, they might be able to do it for your neighbors for a fee. They can also set up a garage sale and help declutter the house at the same time. If they are older, they can get a part-time job to earn some cash. They can even use this money and save it for college.
Try saving for their college expenses
The reason why this is part of financial parenting is because your children needs to understand that the cost of attendance in higher education is quite high. This is important as Forbes put the total student loan amount at $1.5 trillion. There is a 529 Plan which helps you save for your child’s college expenses as early as now. It will also be easier for other relatives to pitch in as they can put money into that plan as well.
One thing this teaches your child is that it is never too early to start preparing for tomorrow. It is a good idea for them to have an active participation in this fund. They can put in their own money into the account. To make it fun for them, work out a matching program where you promise to put in the same amount of money they do into the account. The bottomline is that they see the value of saving money for something they need later on.
Financial parenting is an integral part of raising your children to become independent as well as financially savvy grown-ups. The better they are in managing their finances, the lower the chances that they would fall into bad debt.