You don’t want your kids to grow up with money baggage. And since family is one of the most formative influences on a child's future earning power, teaching your kids to make smart decisions about money and investing starts at home.
But where do you begin? While it may seem counterintuitive to instill such big lessons in someone so little, there are baby steps you can take. The first of which is ensuring your children grow up well-adjusted and prosperity-minded.
Which is as simple as starting with these 10 tips:
Share Your Values
For example, if education is a value in your home, let your kids know that you are deferring spending money today so that you can tuck money away for their education down the road.
Be Open About Money
We're not suggesting you need to divulge every little detail about your financial situation to your children—whether it's a sudden windfall or a money woe. All the same, open up the conversation about money with your kids. If your children are a bit older, explain what's happening in the economy today and how this impacts your family.
Even in the most difficult of times, there are things to be grateful for. Even if your kids are only toddlers, make it a daily practice to share five things you are grateful for; ask them to do the same. For the most part, their choices won’t even be material in nature. It’s important to show them, from a young age, that the greatest values in life are priceless.
Teach Them to Work for What They Desire
In our efforts to make our children happy, sometimes we fail to teach them that they need to work for what they want. Even if this means holding them accountable for their actions when they’re still young, you need to teach them to be willing to do what it takes to accomplish their goals.
Show Them that Having Fun Doesn't Always Mean Spending Money
Instead of always going to sporting events, movies, plays or shopping in order to spend family time together, find options that don't cost anything. Playing board games, going for walks, or spending time appreciating nature are all great ways to enjoy each other’s company without dropping big bucks.
Be Dedicated Givers
Giving to others is one of the best ways to share our values with our children. Whether you volunteer together, or make decisions on charitable contributions as a family, you are helping your kids realize that one of the blessings of having money is being able to help others.
Guide Them to Become Lifetime Learners
Show your children that you are still learning about money, too. Share with them ways to learn, including reading newspapers, magazines and books. When they get older, show them how you manage your accounts, and what i means to keep track of money online.
Teach Them to Visualize the Future
Our minds are amazing tools. Athletes have used visualization techniques to enhance their performances for many years—teach your children to do this for all of their goals, including financial ones. Younger children might hold a picture of a particular toy they want, while older kids can envision themselves at their dream college.
Consider Giving Your Children an Allowance
Allowance is a great way to start teaching your children practical lessons about money management. In the beginning, you may want to set very specific guidelines about the allocation of this allowance. A portion should go into their piggy banks for long-term savings (later to be brought to the bank for deposit into their accounts). A portion should go to help others who are less fortunate than we are, and a portion should be for them to spend.
Be Aware of the Messages You Send
Are you teaching your children that money is scarce, that rich people are bad, or that financial decisions are frightening? Do they see you arguing about money with your spouse? By being conscious of what we say and do with our children regarding money, we can help them form positive money habits they will have for their entire lives.
Ellen Rogin, CPA and CFP®, is the President of Strategic Financial Designs, a life and wealth advisory firm in Northfield, Illinois. Ellen is co-author of the book, Great with Money: The Women’s Guide to Prosperity.