Our views on money management were modeled by our parents. Attitudes and fears are attributable to lessons that we learned or didn’t learn growing-up. Before teaching your children about finances, it is important to explore and understand your relationship with money. Understanding your own emotional relationship with it will help you to avoid passing on bad habits. Fatherhood Buzz has listed four tips for teaching your children money management. They are: keep a budget; track expenses; check credit scores; and start saving.
Have you ever tried and failed to keep a budget? Most of us have. The key is to make it realistic. An unrealistic budget is doomed to failure. If your budget is too restrictive, you will not follow it. When planning your budget, it is important to make a list of essential items. It is also important to teach your children to reward themselves on occasion. Going “cold turkey” on pleasurable purchases often leads to failure. Creating a realistic budget and following it, will help you to accomplish your financial goals whether it’s eliminating debt, building your savings or making a large purchase.
Track all your expenses. It will help you see where you spend your money. It’s hard to know where you’re going if you don’t know where you’ve been.
Did you know that it’s free to check your credit score once a year? Checking credit scores ensures that you are aware of all your debt and can correct any errors. Teach your children that bad credit scores can affect everything from getting a job to renting an apartment or buying a house.
Finally, create a “rainy day” fund or savings account by saving even a small amount of your check every pay day. Teach your children to “pay themselves first” by making regular deposits into your savings account. When I was a boy, my uncle encouraged me to save a quarter every day. I only did it for a short period of time, but can you imagine how much money your child would have by eighteen by saving a quarter every day? For children, even saving a smaller amount each day is a great practice.
Implementing these tips and passing them on to your children will create financial practices discipline that will pay dividends for your children. Managing money well is vital to their future.
Dr. Ronald Banks, Project Fatherhood, Children’s Institute.