For better or worse, kids copy their parents. In fact, they are more likely to “do as you do”, rather than “do as you say”. This can be good, or it can be eye-opening to bad personal behavior. Kids imitate more than mannerisms. What kids learn today will affect their success tomorrow. According to asset management firm T. Rowe Rate, parents with poor financial management are more likely to pass bad money-management habits on to their kids.
T.Rowe conducted a study which found parents with large credit-card balances influenced similar behavior in their millennial children. In some cases, these kids already carried over $5,000 in debt, a lot for a young person. Making matters worse, the same children had less interest in saving and none in clearing their debt. They expected parents to pay their expenses as they got older, with no plans for securing their own financial future.
Parents who exercised sound financial decision-making fared better. Often, those children grew up performing financially better than the parents. These children were also more likely to have college savings in place. The study confirmed what many already suspected: parents are a child’s largest financial influence.
According to T. Rowe, kids develop financial discipline at a very young age – well before high school. Teaching smart money matters to children at an early age creates advantages. The principles of saving and smart-decision making should be part of home life.
An allowance is a good way to introduce money management to children. An allowance can teach the principles of saving and spending. Family budgeting is another way to involve children in money matters. Vacations and other large purchases have opportunity costs. Teaching children the importance of balanced decision-making helps them later on. Without using money children can learn budgeting using allowances of time for entertainment.
Start teaching smart financial skills today. Teach kids to be financially independent right at home. Classes exist online or contact an expert. Give kids the tools to succeed later in life. Good financial skills are for everyone. Save today and enjoy tomorrow!
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Originally posted 2017-10-04 02:00:00.