Starting early and being consistent are the keys to helping your children avoid the big bump that comes with hitting the financial world uninformed.
Start with regular savings. If the child has an allowance, convince him or her that putting a portion of that money into savings is a good idea. Don’t just assume they will go along with that approach. If they can be taught to save toward a particular goal, such as a new toy or a special outing, it will be more meaningful. But if they only save money to spend it immediately, they may miss the message. Only a portion of their savings should be in this category.
Many parents (nine out of 10, according to some sources) expect children to work for their allowance, another little dose of the real world that may come in handy as they embark into their own financial independence.
Sharing your family financial basics with children as they are able to understand is good backup for savings accounts. If your own finances are in disarray, they will have a hard time coming to healthy conclusions. Remember that the amount of the child’s allowance or savings is not as important as the consistency.
Starting early and regularly to absorb the basics of money management is the key to responsibility later on. When faced with their first forays into auto ownership, college and other adult expenses, they won’t be overwhelmed with it all. The loan officers with whom they deal will be more impressed if they have the vocabulary and the familiarity with financial terms and concepts.
Sound, lifelong money management skills may be the best gift you can offer to your children.