How to model good financial behaviours for your kids

Author: Miranda Marquit

Source: MoneyNing

Do you talk to your kids about money? When was the last time you helped them save towards a goal, or talked about the importance of budgeting? Do you model good financial behavior as a family?

Lessons to teach teens

As my son approaches his teenage years, I'm thinking more about what I teach him concerning money. We've been careful to help him learn how to plan for purchases, save money, and give money to charity. Now, we're starting to help him learn how to invest, and talking about what makes a good investment.

However, I realize that I haven't taught my son much about credit so far. He doesn't have a good handle on debt and credit, and he doesn't really get what it's about. This can be dangerous if he grows up and has to figure credit and debt out for himself.

Once, a couple of years ago, we let him borrow against his allowance for something, and we showed him that he would have to pay interest. He made payments each week for a month to repay us, but that lesson was a long time ago, and I'm not sure how effective it was.

"Being purposeful in teaching their children how to handle money and credit wisely is a necessity," says Eva Baker, the founder of the blog TeensGotCents, of parents. I admit that, so far, there hasn't been a lot of purpose in the way I've taught my son about money and spending.

So I hope to approach it more consistently going forward. He's reaching a time in his life when good habits can be developed — and bad habits can be as well.

Be careful about adding financial responsibility

As you teach your kids and teens to use money, especially credit, it's important to be careful about adding financial responsibility.

For example, you don't want to add your child as an authorized user to your credit card and let him or her have unlimited access to your funds. Instead, make sure they understand what's happening and that they take responsibility.

Often, this means laying the groundwork ahead of time. Help them progress in steps so they don't become overwhelmed. Another concern is that they don't have a good grasp of how money works, and then end up in trouble.

Talk about credit, and show your child how to use it responsibly, paying off the loans as soon as possible. Use your own student loans or car loans as examples. Real world application will allow them to learn a lot better.

Your kids won't learn how to manage money on their own; if you don't make it a point to teach your kids, they will likely make poor money decisions. "If a child is terrible with money," Baker points out, "it's possible that the parent is a big part of that problem."

Do you want kids with better money management skills? Start with these four lessons everyone needs to learn and pass on to their own children.

1. Give every dollar a job

Kids need to learn that every dollar needs a purpose early on. You can teach the kids when they get an allowance and birthday money that a portion needs to go to savings, giving, and spending.

2. Say no to impulse buying

Saying "no" to kids when they want something in the store is hard, but it's disastrous if a child gets used to impulsive buying. Instead, help children come up with a savings goal for a particular item. If they are saving $50 for a special toy, then they need to realize that $2 impulse buys on candy or junky toys will ultimately delay their saving goal and make them less happy.

3. Learn how to comparison shop

Teaching your child how to take the time to do the research will help their money go further. A new iPad might cost $329, but if they shop on eBay or Amazon, they can get a refurbished model for half the price.

Along with comparing prices, teach kids to look up reviews on items. I've saved thousands of dollars in my lifetime just by reading reviews of a product before I bought it. It stinks to pay a lot of money for something that doesn't work like it is advertised. Taking time to search the product beforehand can prevent wasted dollars.

4. Learn how to bounce back from mistakes

Even though you want to equip your child with financial wisdom, there is a good chance they will still make silly money mistakes. That is okay. It's especially important for kids to make money mistakes now, when only a few dollars are at stake, rather than later when much more money is at risk.

If your child is insistent on buying that low-quality toy or wasting their savings at the arcade, then let them do it. Hopefully, they will learn that spending money in this manner doesn't make them as happy as they thought it would.

The best way to teach your kids to be financially-wise is to be an example for them. Don't be afraid to talk to your children about your finances or about money mistakes you made when you were younger too. Your experience is extremely valuable, and not just to you.

What kind of financial habits are you helping your kids and teens develop? How can you prepare them for good money habits as adults?

This article was written by Miranda Marquit from MoneyNing and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to