Happy New Year! With new beginnings, we’re ready for new goals, and this is a great time to consider a fresh financial start for you and your family.
Last year, we talked about strategies you can use to build a healthy financial relationship with your spouse. In these next few columns, we’ll continue to discuss finance in the family, by going over steps you can take to promote positive financial habits in your children.
Kids learn about money from the lessons you give them, and from what they absorb as they watch you and your spouse handle money for the family.
Kids also can learn about money through school, their classmates, television, or other means, but they put what they learn into practice in the context of family life.
Positive role models As a parent, you play an enormously influential role in shaping your child’s financial attitudes and habits, and those habits will continue to have an impact long into your child’s life.
When you recognize how strong a ripple effect your financial habits have in the lives of your kids, that recognition can be great motivation to get your finances in shape.
The positive financial behavior that you demonstrate now can be doubled and tripled down the line, as your kids take on good habits for themselves.
Set a goal Before you start teaching lessons to your kids, it’s worthwhile to consider your own financial habits first, and how your behavior can be used as a direct example.
Take, for instance, the habit of saving money. You can tell your kids, as a general rule, that it’s good to save. But it can help drive the lesson home if they see saving in action, and if they can mimic the act of saving on their own.
You can try setting a goal of your own for the next few months.
At the same time, ask your child to set his or her own savings goal.
In your example, you can describe how much you plan to set aside from your income every pay period, how you figured out the time frame for saving, and why that goal is important to you.
Next, you can ask your child, using a portion of allowance, to make a similar plan for his or her own goal, and to explain why he or she chose that goal over others. That explanation can help strengthen your resolve and your child’s resolve to save.
Recording progress In the next few months, you both can add to your savings at the same time, and keep records side by side, so that you and your child can see the progress that you’re making. In this way, you can accomplish one of your own savings goals, and provide a solid example for your child to follow.
You can build similar lessons in budgeting, credit, investing and otherwise managing money. Choose a small part of your monthly financial chores, explain its basic p arts to your child, and create a small scale version of the task for your child to experiment with. Those small lessons, and the greater example you provide, can help your child develop healthy financial attitudes that will make a difference far into adulthood.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 19 years experience in retail banking and with financial institutions in Guam and Hawaii. You can email him at email@example.com.