How To Teach Children Healthy Money Habits

Instilling healthy money habits in your children at a young age can help them approach financial matters with confidence. According to Forbes, less than 50% of American high school students are required to take a financial class before graduation, so the home is only place most children will learn crucial money management skills. Here are some tips to teach your children financial responsibility and set them up for lifelong success.

Talk To Them About Finances

Money can seem like a stressful, intimidating, or uninteresting topic to children, especially when they don’t fully understand it. Talking to your children openly about finances can familiarize them with common financial issues and actions, making them more comfortable and more likely to ask questions and take initiative as they gain financial independence.

However, it’s important to be thoughtful during these conversations. Hearing parents argue about money or use phrases like “we can’t afford it” and “that’s too expensive” can teach children to associate money with anxiety. Instead, take the opportunity to explain the importance of financial planning and saving when such examples present themselves. Calm, clear communication will help your children develop a healthy relationship with money.

Involve Them In The Budgeting Process

Developing a family financial plan has many benefits, including getting your children involved with the family budget and improving their financial literacy. Explaining how a budget works, showing them how to create and edit a budget document, and including them in financial planning discussions will prepare them to maintain their own budgets as adults. Familiarity and involvement with the family financial plan will also make it easier to teach them about more complex financial topics, such as taxes and investments, as they grow older.

Help Them Start Saving

Even young children can learn how to track their spending and allowance earnings with a dedicated space to save money. While young children can use a piggy bank, many financial institutions will allow you to open savings accounts and even debit cards in your child’s name. These accounts allow for parental control and oversight while still giving your child enough freedom to gain firsthand experience in managing their own money.

Teaching your children healthy financial habits at a young age will help them develop a positive attitude towards money and set them up to experience more financial success and less stress as adults. For further resources, see Investopedia’s guide to the best finance books for children and, as always, please contact us with any of your financial management questions.