Once your children have experienced accumulating money in their piggy banks, or adolescents begin earning money, parents can take a hand in helping them prioritize what they’ll do with those dollars.
A 2018 study from Brigham Young University found early experiences with money management are linked to more savings and better credit as adults, along with parents serving as positive financial role models. Cash that can be divided and earmarked for various purposes helps young children visualize what budgeting means. This also helps them carry these habits into the future. And as money management will be increasingly conducted digitally, using budgeting apps when financial planning with your child may also be fruitful.
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Dividing money between spending, saving, and sharing
Helping children with their money management skills pays many benefits. Besides imparting practical lessons like how savings can earn interest or credit cards aren’t a plastic magic wand, parents show children how values figure into money management.
Tell children why you support various causes or groups, and how you try to balance your money between what the family needs now and what will be needed later. Have children earmark their own dollars by talking through their personal priorities with you. Maybe they are concerned about the environment, and they want to contribute to a clean ocean fund. Or, by discussing what they spend money on weekly, they may decide forgoing a treat is worth it if they’re building a new bike savings fund. You’ll be showing that future needs and supporting worthy causes are as important as the gratification of spending now. The patience, generosity, and emotional control a child develops through an early, healthy relationship with money will pay lasting dividends.
This story originally appeared on GoHenry and was produced and distributed in partnership with Stacker Studio.
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