If I Could Teach Only One Financial Lesson
By Joe Globensky, RFC®
After 27 years of being a Financial Advisor, you might expect that I could share many financial tips that would help you progress towards a secure financial future. So how do I pick just one financial lesson to share?
Financial Literacy Month
April is National Financial Literacy Month. It was developed to help Americans establish and maintain healthy financial habits and is a great opportunity to improve your financial knowledge. Also, today, April 22, 2021, is National Teach Children to Save Day. Sponsored by the American Bankers Association since 1997, it is a day designed to encourage children to develop good savings habits.
So, it was pretty timely that if I could teach only one financial lesson, it would be to start developing good money habits early in life.
Developing good money habits at a young age can create a foundation for a lifetime of saving. Getting involved with your children and grandchildren to help them develop a savings plan and money management skills can prepare them for a solid future.
Financial Lesson: Teach Good Money Habits
I’ve often struggled with the fact that rarely are these skills taught in school. It’s typically up to parents and other family members to teach children financial lessons so that when they head out into the world they avoid pitfalls that can be financially devastating. Therefore, an early start on understanding budgeting and saving money will give children solid habits as they head into adulthood.
Some of the things we can do to teach good money habits early on include:
- Give each child a bank. And it helps if it is one where they can see their savings grow.
- Let them earn their own money. If you want your children to become savers, allowing them to earn and save money provides them with the opportunity to learn how to use it. When you offer an allowance in exchange for chores, they’re also learning the value of their hard work.
- Open a savings account, set a savings goal, and provide incentives. This way they can monitor their account and watch their savings increase. You may offer to sweeten the deal by providing an incentive to reach their goal by a set date.
- Show them what things cost. Then when they want something new, such as a toy, video game, or book, compare the cost to their current savings and have them consider whether it is worth the price.
- Demonstrate needs versus wants. For example, explain how food, shelter, and clothing are necessities. Whereas going out to eat or buying a new television are wants. Teach them how to place the needs before the wants.
- Have them track their spending. Part of being a better saver means knowing where your money is going. Encourage them to think about how they’re spending and how much faster they could reach their savings goal if they were to change their spending patterns.
- Talk about money. It takes an ongoing discussion for kids to really learn good money habits. Whether that’s a regular weekly check-in or daily money chats, the key is to keep the conversation going.
- And finally, set a good example. If you want your children to become savers, being one yourself can help. Getting your emergency fund in shape, opening a 529 savings account, or simply increasing your 401(k) plan contributions are all steps that you can take to encourage saving as a family activity. You could also decide to save money for something together, such as a big-screen TV or family vacation.
Today, celebrate National Teach Children to Save Day, and for the rest of the month, celebrate National Financial Literacy Month. But don’t let your efforts stop there. We have many resources to help you learn healthy financial habits on our blog.
At Connections Financial Advisors, we create a truly comfortable and educating experience as we empower you to meet your financial goals. We would be happy to meet with you and your family to help improve your financial knowledge and solidify your saving habits. Give us a call today at (217) 605-8130 or send us an e-mail.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
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