As a parent, it’s easy to feel like your financial habits, decisions, successes, and mistakes only impact you. However, years of research and analysis show that your children are watching and absorbing your every move (even from a very young age). Keep this in mind as you make choices with your money.
Your Truth Becomes Your Child’s Truth
As parents, we often feel like our children aren’t listening to us. In fact, there are plenty of instances where we feel as if our kids are downright defying us. But, truth be told, they’re watching, listening, and internalizing far more than we think. This is especially true when it comes to money.
“Most of us have money narratives from our childhood years, which color our present financial behaviors,” certified financial coach Christine Luken says. “As young children, we tend to internalize everything our parents tell us as the truth and this includes what they say about money.”
As a parent, this can feel a little intimidating. However, it should also serve as encouragement. It means you have the power to positively shape your child’s view of money so that they eventually make smart decisions with their own finances.
How to Raise Kids With Strong Money Principles
Equipping your children with strong money principles requires some intentional planning on your part. Here are several suggestions:
1. Take control of your finances.
The best thing you can do is lead by example. If you want your children to have a positive view of money, it starts with you taking control of your family’s finances.
The first step is to create a budget so you understand how much money is flowing in and out of your accounts each month. This gives you an objective look at where things stand. If you’re spending more than you’re bringing in, something is off. But if your income far exceeds your expenses, you know you’re in a good position. In one sense, a budget is a diagnostic tool.
If you’re currently drowning in debt, you may want to meet with a financial expert to discuss your options. Bankruptcy, as scary as it sounds, could be an option.
“Bankruptcy is not a disaster,” attorney Devin Sawdayi assures. “It’s a strategic financial instrument that you can use to resuscitate your financial situation and get your family back on track. You simply have to know how and when to use it.”
A bankruptcy attorney can help you determine when bankruptcy is a good option and when it’s unnecessary. Having these conversations sooner rather than later can put you in the best position to be successful.
2. Adopt a balanced approach.
You can view personal finance on a spectrum. On one end, you have savers. On the other end, you have spenders. Most people gravitate toward one end. However, to have a healthy relationship with money, you ideally want to land right in the middle.
When you adopt a balanced approach to money – meaning you don’t save every penny or spend every penny – it shows children how to have a healthy relationship with money. It teaches the value of saving without hoarding. It also teaches the power of spending while still
living within your means.
3. Include children in money conversations.
Many parents make the mistake of only talking about money when their children are out of the room. And while there are times for private financial conversations out of earshot of the kids, there’s also a time and a place for including children in these discussions.
By including children in money conversations – or at least letting them overhear these discussions – you teach them that money is normal. You remove some of the mystery and mystique from this topic and show them how to evaluate financial decisions.
4. Teach children to work for money.
Children who understand the value of money grow up to have a much healthier financial DNA than those who lack context. The only way to teach a child the true value of money is to have them work for it. When children develop an association between work and money, it changes
everything. It changes how they view saving, spending, and investing.
Adding it All Up
If you do these things, you’ll give your children a significant leg up on their peers. You’ll set them up with a positive outlook on money and help them understand the ways in which it can be used for good. While it’s helpful to start early and be consistent, it’s never too late to reevaluate your finances with your children in mind.
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This content is made possible by Larry Alton.
Photo credit: Shutterstock
