Any parent wants to leave a lasting, positive legacy among their children. We have seen many successful parents who are able to teach good financial values for their children. Here are three things they may teach to their children:
1. Purpose:
Managing money and assets is all about purposes. Children should understand their purposes and know why they do specific things. Children must grow up with a clear model that guides them to achieve good purposes in life. Unfortunately, many parents still wrestle with their own financial purposes. This could cause problem, because children will have no clear guidance for their future.
Parents must be able to share their life’s experience with children, because they have more opportunity to do things and reflect. Their experience may also allow them to clarify things that are meaningful to them. Children listen more intently than adults, so we should use this opportunity to tell them useful information about purpose and things that they should expect.
2. Talk directly about money:
We should talk to our children directly about basics of family finances. This can give them understanding and perspectives. They should know about the meaning of debt. They need to know that debt isn’t free money and we will need to pay more than we borrow. Starting from elementary school, children should be able to grasp essential elements of money and financial plans.
This means, if they plan to purchase a toy, it is important to make planning and save. It is even better we could encourage them to earn money by taking light projects, such as mowing neighbors’ lawns or selling cakes. Eventually, they will be aware that if they want to have a car, it is important for them to save or manage car loans properly. Depending on their personality, interests and age, children should be able to grasp enough information from conversations.
This will open the door for other discussions. As an example, parents can have a “financial plan” session by talking leisurely on the porch with their children.
3. Show children frugality and generosity:
Generosity and frugality are twin virtues and are among the most important things we could teach to our children. Frugality can help us to pay bills and save for the future. A dollar saved is a dollar earned. This is a common principle used by many people. Frugality could also help us to give some of the money we have to people in need. Children should be able to feel satisfaction by giving some of their money to less fortunate people.
Eventually, children will be able to fee that giving is a very fulfilling thing that they can do. Being frugal doesn’t really mean that we can’t splurge on a few things. We can still celebrate special events with the family, go out to dinner and take nice trips. In fact, by being frugal, we could have better quality time with the family.