January 26, 2017

Passing Good Money Habits on to Your Children

It’s never too soon to talk money with your kids. Arming youth with critical financial skills can enhance their quality of life and help them pursue important life goals like college or owning a home.

Good savings habits are best modeled, but there are at least five things that parents can do to teach kids how to be financially responsible:

1. Be specific when telling children what things cost.
Young children lack points of reference when understanding the true cost of a toy, electronic game or cell phone.

2. Let them make choices with money beginning at a young age.
Consider starting kids out with a weekly allowance in elementary school. Help your kids open a bank savings account, showing them how regular savings build up over time.

3. Ask the right questions before making a purchase.
Do children really need the most expensive pair of sneakers? Would checking a novel out from the public library for free be better than buying one at a mega bookstore?

4. Set up “buckets” for short, intermediate, and long-term goals.
Young teens should be able to differentiate between near-term needs (a movie this weekend), intermediate needs (back-to-school clothes), and long-term goals (college).

5. Start early, but don’t overstress.
Don’t expect children to be perfect with money from day one — for all of us, managing our financial lives is a “work in progress.”

For more information, contact Lake Michigan Investment Services by visiting online to lmcu.org/investments, or call (616) 234-6358 for a free, no obligation financial review of your unique situation.