As a parent, you want your kids to grow up to be successful adults. And one of the key ways to help them achieve that is to teach them how to handle money responsibly.
In this following post, A. Fisher & Associates, experts in helping families beat debt, share with us the financial rules they believe all kids should learn. Alongside providing the latest debt solutions, Debt Relief Canada also provide free information from everyday savings tips to consumer proposal vs bankruptcy.
Here are their 10 rules to follow that will set your kids up for financial success.
1. Start them early:
The earlier you start teaching your kids about money, the better. They will be able to develop good habits from a young age and avoid making some of the common financial mistakes that many adults make.
2. Lead by example:
ne of the most important things you can do as a parent is to lead by example. When it comes to money, kids learn best by seeing how their parents manage their finances. This means being disciplined with spending, setting a budget and investing for the future. By showing your children how to be responsible with money, you’ll give them the tools they need to make sound financial decisions when they’re grownups. And that’s something worth saving for.
3. Teach them about needs vs wants:
It is important that kids understand the difference between needs and wants. Needs are essential items like food and shelter, while wants are things that we would like to have but don’t necessarily need. Teach them to be mindful of this distinction when making spending decisions.
4. Encourage them to save:
One of the most important things you can do is teach your children how to manage money. A key part of this is encouraging them to save for future goals. One way to do this is to help them set up a savings account and make regular deposits. A good rule of thumb is to save 10-15% of your income. This will help them build up a nest egg that they can use for major purchases, unexpected expenses, or retirement. Furthermore, it’s never too early to start budgeting. Help your kids understand where their money goes and how to make trade-offs between different spending priorities. By teaching them these essential skills, you’ll set them up for success in the financial world.
5. Teach them about compound interest:
Compound interest is a powerful tool that can help you grow your wealth over time. Teach your kids how it works and show them how they can use it to their advantage. For example, if they start saving early, they can take advantage of compound interest to grow their nest egg over time.
6. Help them set goals:
Goals are important for helping us focus our efforts and stay on track. Sit down with your kids and help them set financial goals. These could be short-term goals like saving for a new toy or long-term goals like saving for college.
7. Introduce them to investing:
Investing is another tool that can help you grow your wealth over time. Teach your kids the basics of investing and how to start investing for their future. For example, you could introduce them to a simple investment like a index fund.
8. Teach them about credit:
Credit can also be dangerous if misused. That’s why it’s important to teach your kids about credit—how it works and how to use it responsibly. For example, explain to them the importance of making payments on time and keeping their balances low. By giving them this information early on, you’ll help them make smart financial decisions later in life. And that’s a priceless lesson indeed.
9. Help them understand taxes:
Taxes are a necessary part of our financial system, but they can be confusing. Help your kids understand how taxes work and how they can save money on their taxes. For example, explain to them the importance of taking advantage of tax-advantaged accounts like 401(k)s and IRAs.
10. Encourage them to give back:
One value that’s always worth teaching is philanthropy. Showing your kids how good it feels to give back to their community can encourage them to do the same throughout their lives. Plus, it’s a great opportunity to talk about budgeting and how to allocate money towards causes they care about. So next time you’re looking for a way to bond with your kids, consider teaching them the importance of giving back. It’s an experience you’ll both cherish for years to come. By teaching your kids these 10 financial rules, you can set them up for success in their own lives. Help them develop good habits now and they will be on their way to a bright financial future.
