In a recent report from the BBC, it was estimated that 8.3 million individuals living in the United Kingdom are unable to pay off their current debts, as well as their household bills. Additionally, the average resident in the country owes £8,000 (in addition to their mortgage). It is clear from these two statistics alone that for many people, managing their household income and expenses is a challenging task.
One way to help prevent bad financial habits in your family is to teach your children about money management as early as possible. Even if you are in the process of creating good financial habits for yourself, you can teach your kids a lot about money at almost any age. Discover three benefits of making it a priority to teach your children positive money habits now.
Allows them to practise good money habits early on
Whether you have a soon-to-be college graduate who will be managing money, or a two-year-old who has just learned about what money is, there is always an opportunity to teach good money habits. While you may have heard the research stating that it takes approximately 21 days to form a habit, this is a bit different when money is involved. To ensure that your child avoids significant debt and financial hardship later in life, teach them about budgeting, saving, and giving. These lessons are often most effective when learned first-hand, so be sure that they get to practise each by experience. Provide chores that they can do around the home to earn money, and then explain how to best use the funds.
Encourages them to save for college
Currently, the average yearly cost of college in the UK is £9,250. Rather than waiting until their early to mid-teen years to discuss the cost of college, it is important to explain this to your children early on in life. Let them know of the importance of saving for the high cost of education right away. Although some children may have a hard time seeing the value in saving for something that is many years away, it is essential to teach this lesson. Not only will they have most or all of the funds needed for college once they reach that level of schooling, but they will have also gained the experience needed to save for long-term financial goals (such as retirement).
Helps children learn to be happy with what they have
If your child is always asking for the latest popular toy or activity, helping them learn about finances can curb these requests. When you begin to teach money management to your children, they will be far more likely to appreciate what they already have. Why? They will see the hard work and planning (budgeting) that has to happen in order to make purchases. This is especially true if they are required to earn their money through chores to make fun purchases.
Although it may not seem like a top priority (especially if you have younger children), educating your kids about money is crucial for a lifetime of financial health. By allowing them to practise good money habits from the beginning of their lives, encouraging them to save for college, and cultivating contentment with their current possessions, you are setting your children up for a happy and balanced adult life.