You baked cookies for your neighbor, you knitted a sweater for your sister-in-law, you splurged on that new iPad your spouse has been eyeing, and now you’re standing in the toy store with your 9-year-old’s seemingly never-ending wishlist in one hand and a coffee that doesn’t seem strong enough to be up for the task ahead in the other.
If you’re a parent, you likely know that the joy of watching your little ones open gifts on special occasions is a special kind of gift in itself. But are you aware of an even greater joy? Nothing compares to the wonderful feeling you get from knowing your children have been set up for long-term success. So get them that Lego set they’ve been gushing about or that mystery novel they can’t wait to read, but this year consider giving them something more as well: a solid financial foundation.
The Gift That Keeps on Giving
Setting your future generations up for success is a lifelong gift that, while they may not fully understand or appreciate today, they will certainly be grateful for as they enter adulthood and become independent. There are many ways to help your children learn basic money skills, but here are a few of our favorites.
- Teach them to budget with a weekly allowance
Many children get an allowance, but not all parents realize the opportunity this provides them to teach their kids about budgeting. As we frequently stress in our blog posts, learning to budget and live within your means is a lifelong skill that is absolutely paramount for keeping yourself on a healthy financial trajectory. Sit down with your child and explain to them that you will give them a set amount of money each week to do with what they please, being sure to clearly communicate what they will be financially responsible for from now on. For example, if they want to go see a movie with a friend, it will be their responsibility to pay for it. If they blew their money earlier in the week on a new video game, they might have to skip the movie. Teach them that buying one thing might mean sacrificing another.
- Open up a savings account for them
Another great option? Take all those birthday checks they’ve accumulated from Grandpa and help them set up a savings account. Teaching kids to save is another critical component to building a healthy financial foundation. Do they really want a new bike? Have they been talking nonstop about getting an American Girl Doll? While you could buy them big ticket items such as these for birthdays or holidays, why not instead help them save up to buy pricier items themselves? Show them what it feels like to want something, save up for it, and purchase it on their own. It’s an exciting accomplishment and helps them to see the fruits of their efforts.
- Strengthen their financial literacy
Too often, young adults leave home and begin their independent lives knowing too little about the realities of the world, especially when it comes to financial matters. How do tax returns work? What does compound interest mean? How does one pay a credit card bill, or any bill for that matter? The world of finance is complex and there is a lot to comprehend. Your child doesn’t have to know it all by their eighteenth birthday, but teaching them some of the basics will give them a head-start.
Continue the Conversation with The Humphreys Group
At The Humphreys Group, we know that, while your wealth is important, your family is number one. Our planning process has a single purpose: to manage your wealth so that you (and your family) may live fully and confidently. For more information on how we can help you teach your children about financial stewardship, contact us today.