One of the most important responsibilities parents have is teaching their children about money. Sound money management skills can set your child up for a life of comfort and generosity rather than stress and debt, so take a look at these three essential lessons to impart at key stages in your child’s life.
Earning and Budgeting
Starting at a young age, teach your kids that money must be earned. You might do this by establishing extra tasks for them to do each week to earn an allowance and then pay them in cash. Now, have kids allocate their money across three clear jars: spend, save, and give. This system makes the experience of using money visual and tangible.
Paying for College
During your child’s freshman year of high school, have a talk about what you’ll be able to afford without loans, what financial aid and scholarship options might be available, and the types and consequences of student loans.
Set realistic expectations early on so your child doesn’t plan to incur too much debt. In fact, what would it take for them to graduate with zero debt? Now’s the time to figure out if that’s possible, and if it is, make a plan to get there.
Sometimes a young adult truly needs financial help after graduation due to uncontrollable factors like limited job options in their field or a long-term illness. At other times, patterns of dependence arise out of habit and comfort — your child may be used to having some help with their bills and you’d rather avoid a difficult conversation.
Ultimately, it’s best if young people learn to become financially self-sufficient regardless of the situation. And of course, it’s important to prioritize saving for your retirement so your children don’t have to support you later.