5 Things to Teach Your Kids so They Will be Successful with Money

No matter where we stand financially as adults, we want to see our kids succeed. Nobody wants their kids to have to try to dig out of the pit of debt. And don’t you want your children to be able to not only live a debt-free life, but to be successful with money to such an extent that they have the freedom to pursue their biggest dreams?

As parents we want the best for our kids. And we have the big responsibility of teaching them how to handle their money the right way. Whether you have handled your money well in the past or not, it is time to start teaching your kids how to manage their money well.

Here are the 5 best, most important things you can teach your kids about money:

1. What money is (and what it is not). Is money love, security, or happiness? It is tempting to think so, but the truth is that money is not any of those things. At iMoneyCoach we think of money in terms of your limited time and energy here on this earth. You trade that time and energy for money that you can use to buy things. Start teaching your kids now that it takes time and effort to make money and that time is limited. This can seem like a big stretch to kids. Do you remember when you were younger and life seemed like it would last forever? Start by sharing the idea that after the work is done to earn the money, there is more time left for play.
2. How to budget. Knowing how to budget and being able to decide how much to spend and on what to spend it is the key to financial success. Small businesses to large corporations use budgets to be successful, and we should do the same. And we should teach our kids early to budget as well. Start small and simple. If Johnny gets $20 allowance and earns $20 mowing lawns, then he has $40 in his budget. He may have 4 categories to divide it up into, and that’s fine. He’ll put $5 in each for Saving Longterm, Giving, Toys, and his New Bike Fund. Learning early how to budget will help your child understand prioritizing and give him power over his finances.
3. Save, save, save. Teach your child early the value of saving. Unfortunately our culture is inundated with messages that we need to spend NOW or we’ll miss out, that we have to have what we want immediately. Generations before us knew the value of saving though. Teach your child that if he wants that new toy, he needs to save up enough money to pay for it first. Learning this lesson early will help your children avoid debt in the future.
4. Be generous. Being generous has many benefits, including helping you manage your money better. When you know how to share, you become less stingy with your money and develop a better attitude towards it. Teach your child early the value of giving. Whether as a family you all contribute towards a fund, or if your child sets aside a certain amount, teach her to watch out for people in need or causes to support. Setting aside money in a “Giving” category when first entering it into the budget sets the tone for the rest of the finances.
5. Stay out of debt. Let’s face it, getting out of debt is no fun. It takes time and extra work to get out of debt that more often than not can be avoided. Give your children the tools they need to start out on the right track so they can save and be financially successful without having to ever fight the debt battle. If you have struggled with debt, share with your child how hard that is and how to avoid it. If you have overcome debt, teach your child how great it feels to be without debt. And if you need a little help in that area yourself, be sure you get out of debt as soon as possible so you can continue teaching your child how to live the best possible financial life.

As always, we’d love to hear personal examples and stories of how you have helped your children learn to be financially successful. Please leave us a comment and share!

Tags: kids and money