“Leading by example” is probably one of the most overused yet undervalued pieces of parenting advice. This is particularly true when it comes to personal finances.
Many parents aren’t sure what to teach their children about money, yet they will ultimately be the most influential financial teacher their child will ever have. Children begin learning about money from the time they are toddlers through observing their parents’ financial habits – and those observations ultimately shape the values, beliefs and habits they bring into adulthood.
That said, to make a real difference in your child’s financial future, do not wait until they are teens to start talking about money. Instead, start modeling healthy money habits early to help your children develop the one key quality that determines future financial success: SELF-CONTROL.
You can nurture self-control in your children through simple everyday life lessons. For example, if your child has been asking for a special toy, encourage her or him to start saving for it. Make it fun by helping your child decorate a savings jar and affix the desired goal amount to the outside. Help your child add to the jar each day, and assist her or him in counting the savings. Celebrate the day the goal is met with the purchase of the hard-earned item.
As your child gets older, the jar becomes a savings account and the toy becomes a larger purchase, but the habit of long-range saving and exercising self-control is still there. By modeling and teaching self-control, you have provided your child with the understanding that financial success comes from the small decisions we make and the actions we take each day – a lesson that will last a lifetime.