Tips for Modeling Good Financial Behavior for Your Children

Tips for Modeling Good Financial Behavior for Your Children

Kids learn a lot from their parents, including how to handle money. But that doesn't mean you have to be financially flawless—very few people are.

 

However, you do need to be aware your kids are watching you, learning from you, and building money habits right now. That said, here are some tips and ideas for modeling and promoting responsible financial habits in your children.

Get kids involved in household expenses

Susan is a Certified Financial Planner (CFP) and single mother of three boys, ages 17, 15, and 13. When they were old enough to understand the concept of bills, she got them involved in keeping monthly costs in check.

 

For example, her electricity bill was $150 and she wanted to get it down to $120. Instead of constantly reminding them to use less electricity, she asked them for suggestions for lowering the monthly bill.

 

“One of the boys suggested LED lightbulbs, so we did that," Susan said. "They also said we should wash clothes in cold water, which we also did. By incorporating all their suggestions, we got the bill down to our target."

Take Advantage of Technology

Terri, a banking executive with a 16-year-old daughter and a 12-year-old son, uses a joint account so she can monitor her daughter's debit card spending and transfer money into her account.

 

“Using the app makes it easy to monitor her account and transfer money when she needed gas, food, or clothing," Terri said.

 

Shannon, a stay-at-home mom of girls ages 9 and 11, and a son who is 13,also uses an app to keep up with her children's allowances. She added when her son gets a little older, she plans to get him a joint debit card, like the ones offered by GoHenry.

 

Susan said her children use apps to monitor their own accounts and even the family budget. “They are as aware of the status of our budget at any given time as I am."

Make saving money a habit (and maybe even a competition)

Susan's two older boys work, and when they get paid, she has them put a certain percentage of each check in a savings account.

 

“Just as every adult should have some form of an emergency fund, I try to model this with my boys through their savings accounts. I'm trying to build lifelong habits in my kids," Susan said, “and saving part of every paycheck is one of the most important habits anyone can have." Susan matches some of their savings as an additional incentive.

 

Jennefer, an insurance executive, said she and her husband set up savings accounts for their 12-year-old triplets, and when they get money—whether from gifts or earning it on their own—they have conversations about how much they want to spend or save.

 

The saving, she said, has turned into a bit of a competition. “They get a real kick out of getting quarterly statements from the credit union. It's even sparked a bit of competition among them for who has the most savings in the bank."

Be creative with ways they can earn money

Shannon gives her kids an allowance, but it isn't connected to chores. Shannon said her kids have assigned chores but she believes “pitching in is just part of being in a family." Instead, their weekly allowance is designed to help them learn to manage money.

 

Susan doesn't give her boys allowances. “I pay for their home, food, utilities, and more…that's their allowance," Susan said. She doesn't pay her kids for doing chores “they should do anyway," but she will pay them for helping her out with tasks above and beyond regular chores.

 

Instead of chores, Jennefer said her kids' allowances are based on grades. “I never thought I'd do this," she said, “but it motivates them to do well in school—it works. We tell them school is their job."

Introduce them to investing

Susan gave each of her boys $50 to buy stocks. She opened an online account for each of them, then they did their research and selected the stock they wanted. “Obviously they only got a share or two," Susan said, “but they watch their stocks online and understand the concept of investing."

 

Shannon's son read about Dogecoin and became interested. She encouraged him to invest, so he bought $20 worth. “It quickly doubled in value, but then Elon Musk said something negative about the currency and it dropped to almost nothing," she said. “Elon Musk is not a very popular person in my house right now."

Promote saving for purchases and smart shopping

All the moms agreed they try not to buy their kids much beyond necessities. It is tough, Susan said, because “we live in an affluent area where kids get everything."

 

Terri's kids have to save up their money for big purchases, and she will match some of their savings if they're working hard toward their goal. She also requires her children to save up to replace items they lose or break, such as an iPod or phone.

 

Jennefer said when her kids do want to spend money, they head straight to Amazon. “This gave us the opportunity to teach them how to comparison-shop and to think about what's the best value," she said.

Teach them about making choices

Shannon said her kids go to the community pool several times a week in the summer and want to buy snacks while they're there. “I have three kids and they would spend around $6 each at the snack bar," Shannon said. “That's almost $20 every time they go to the pool!"

 

Instead, they now have a choice: Take snacks from home, or spend their own money. “[It's] funny how snacks from home are much more acceptable when they have to spend their own money," Shannon explained.

Practice What You Preach

Teaching kids about money is just part of the equation. It's also important to practice what you preach.

 

“As a single parent, it is important to teach my boys to be purposeful and mindful about their spending habits," Susan said, “and just as important to practice what I preach by allowing them to see me making smart spending and saving habits."

 

Think you might try any of these tips? Have some tips of your own? Share your thoughts with us on Facebook or Twitter @gohenry #letstalkmoney.

 

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Written by GoHenry Published Feb 11, 2022 ● 3 min. read