As a dad of young children, part of your fatherly responsibility is to give your kids a strong financial foundation upon which they can build as they mature into adulthood. You don’t need to be wealthy to do this – you simply need to make smart choices.
4 Tips for Being a Better Financial Leader
How did your father handle money? Was he foolish, extravagant, cheap, conservative, or responsible? While not always, most people can trace their own fiscal habits back to those of their parents. If your dad taught you good money principles, then you’re probably thankful for his maturity in this area. If he failed to teach what you needed to know in order to be prepared for the real world, then you likely have some scars to prove it.
As you raise your own kids, it’s important that you teach them by example. Here are some specific tips for executing in this area:
(1) Deal With Poor Credit
Few things will hold you and your kids back more than bad credit. When you have bad credit, it becomes difficult to get approved for car loans, mortgages, credit cards, and even basic things like utilities and phone contracts. The longer you let bad credit go on, the more your children will think it’s normal.
There are lots of ways you can proactively improve poor credit. For starters, you should work with a credit repair company to see if there are any inaccurate, negative marks on your credit report. Approximately 20 percent of all Americans have mistakes on their reports and you could be one of them.
(2) Get on a Budget
It’s impossible to be smart with money if you don’t know how much is coming in and going out each month. One of the best things you can do is get on a strict budget and involve children in the process.
Getting on a budget will not only help you identify areas where you’re being irresponsible with money, but it’ll also give you an opportunity to teach children about the difference between basic necessities – like housing, food, and utilities – and superfluous expenses – like eating out and going to the movies.
(3) Teach Kids How to Save
Limping along from paycheck to paycheck is no way to live. It teaches your kids that you’re supposed to spend everything you make, when the reality is that wealthy people understand the power of saving.
In your monthly budget, make sure you have a line item for savings. Over time, your family can watch this number increase and feel good about the future.
(4) Give Commissions, Not Allowance
If you decide that your kids need some money every week/month, please don’t give them an allowance. An allowance begins to feel like an entitlement and teaches children absolutely nothing about smart money management. Instead, give them “commissions” that are tied to household chores and responsibilities. If they do extra work one week, they get more money. If they don’t do anything at all, they don’t get anything. Sounds like the real world, huh?
Get Your Act Together
There’s a reason family trees tend to remain financially well-off for generations and it has little to do with “generational wealth” in most cases. In the vast majority of instances, it’s simply because parents teach their kids what it looks like to handle money responsibly. The kids then do the same with their children and so on.
Whether you make $50,000 per year or $5 million per year, part of your role as a dad is to be smart with your money and teach your children about the principles of fiscal responsibility. Are you living up to this challenge?