As a parent, you want to do everything you can to help your child be successful in life. One important way to do that is to teach them how to manage their finances.
In this post, A. Fisher & Associates, through their site Debt Relief Canada, breakdown financial rules parents can start teaching their kids from an early age. As experts in debt relief, A. Fisher & Associates provide information on everything from consumer proposals and credit card debt to how long Ontario debt collectors can chase a debt.
Check out the 12 financial rules below:
1. Start early
Budgeting, financial planning, and money management are important skills that everyone should learn. And it’s never too early to start. Begin by teaching your kids basic concepts like counting and identifying coins and notes. As they get older, you can introduce them to more complex topics like budgeting and saving for future goals. By instilling good financial habits early on, you’ll set your children up for success in adulthood.
2. Set a good example
Children are quick to pick up on the habits of those around them, so it’s important to set a good example when it comes to money. If you’re always spending recklessly or racking up debt, your children will likely follow in your footsteps. On the other hand, if you’re mindful about your spending and make financial goal-setting a priority, your children are more likely to do the same.
3. Encourage them to save
One of the most important financial lessons you can teach your children is the importance of saving. Help them set up a savings account and make regular deposits, teaching them that it’s important to put away money for future goals. As they get older, you can introduce them to different types of savings accounts, such as those for retirement.
4. Teach them about needs and wants
One of the main reasons people get into financial trouble is because they have trouble distinguishing between needs and wants. Help your children understand the difference between the two and teach them to be mindful of their spending. When they want something that isn’t a necessity, encourage them to save up for it instead of buying it on credit.
5. Help them understand the value of money
In today’s world, it’s easy to spend without really thinking about the value of money. Help your children put things into perspective by teaching them how much work goes into earning an income. You can also help them understand the value of different items by showing them how much money they would need to save to purchase them.
6. Encourage them to give back
One of the most important financial lessons you can teach your children is the importance of giving back. Help them set up a savings account and make regular deposits, teaching them that it’s important to put away money for future goals. As they get older, you can introduce them to different types of savings accounts, such as those for retirement.
7. Help them understand debt
Debt is a fact of life for many adults, but it doesn’t have to be for your children. Teach them about the different types of debt, such as credit card debt and student loans, and explain how they can impact their financial future. Help them understand that debt should be avoided if possible, and show them how to create a budget so they can stay out of the red.
8. Teach them about credit
Credit is another important financial topic that your children need to understand. Help them understand what credit is and how it works. Explain the importance of maintaining a good credit score and show them how to use credit responsibly. You can also teach them about the different types of credit, such as secured and unsecured credit.
9. Help them understand interest
Interest is a key concept in financial planning, and it’s one that your children need to understand. Help them understand how interest works, both in terms of saving and borrowing money. You can also show them how compound interest works and explain the importance of starting to save early.
10. Introduce them to financial planning
Financial planning is a critical skill that everyone needs to know, and it’s one that you can start teaching your children at an early age. Help them understand the basics of financial planning, such as setting goals and creating a budget. As they get older, you can introduce them to more complex concepts, such as investing and retirement planning.
While financial education isn’t typically taught in schools, it’s something that all parents should make a priority. By teaching your children about money, you’ll set them up for financial success later in life.
