Starting your child on the road to good financial habits early is every parent’s responsibility. Toddlers as young as 3 are often interested in learning about — and capable of understanding — grownup topics such as banking and finances. Many basic habits are set by the time children are 7 years old, so do your kids a favor and give them a head start on developing good personal finance. Here are three great lessons to share while they’re still young:
Good Things Come to Those Who Wait
If you can help your child learn to delay gratification, you’ll arm them with a superpower they can use for their entire life. Nowhere will it come more in handy than in financial matters where credit (why wait when you can have something now?) is so easily available and gets so many people in trouble. In everyday situations where waiting is typical, such as taking turns in the park or standing in line at a store, explain why it is important to wait for what you want.
A Penny Saved Is a Penny Earned
Your parents or perhaps your grandparents probably taught you this lesson: Get your child a piggy bank, reward them with coins for completing small chores that are extra to the regular chores you expect them to do as part of the family and household, and get them saving up for something small but special. You may also want to help them open a bank account at a local brick-and-mortar banking center. Many banks offer juvenile savings accounts with minimal or no fees so children get to know the mechanics of transactions but also can track their money online and become familiar with the concept of compound interest.
Get Rid of the Emotion Around Money
Money doesn’t have to be an emotional subject, though it too often is. Get kids used to crunching the numbers and doing the math. The more comfortable they are with idea of financial arithmetic, the less likely they are to panic when confronted with a challenging or unexpected financial development when they’re older.
As you speak to your children about money, keep your language jargon-free and age-appropriate. Kindergartners don’t really need to know about hedge funds and macro-economics. Even more importantly, try to remain dispassionate. The idea is to get kids into good habits and to not shy away from financial responsibility and the idea of consequences. Be frank and use plain language, but don’t scare them.