Here are 5 tips to help your kids learn financial discipline at an early age that can help shape their financial fitness when they become adults.
1. Teach your children the value of saving and spending wisely.
Teaching your children or grandchildren how to be smart with earning, saving and spending money when they are young will give them skills to help them through the rest of their life. A child, who has never been shown how to save and manage money, will find adopting the concept much more difficult once they begin handling their own finances.
2. Start early to help your children understand how finances work.
When your child is old enough to help around the house or with family chores, they will likely be old enough to earn something related to their contribution/work. It doesn’t have to be much. Be sure to help your children understand the benefit of saving up the money to use toward an important purchase and understanding the impact that savings brings as well.
3. Consider buying a life insurance policy for your children.
Yes, you read that right. A cash value life insurance policy (an indexed universal life policy as an example) can provide cash and living benefits for your children as they start out in the world on their own. This type of permanent life insurance can provide living benefits for college tuition and living expenses, paying for a wedding, financing a car or a home, or other things.
4. Tell your children about how you are building a stronger financial foundation.
Oftentimes, our children don’t see the many ways you are building a stronger financial foundation. It is a good idea to talk with your children about your homeowners, car, life insurance and disability insurance payments, why you spend money on it and how it protects your financial future. Let them know about the money you are setting aside for their college education and retirement. This also helps your kids understand why you might not have money for all the extra “wants” on their list.
5. Provide some guidelines for your children on handling their money.
In addition to helping your children earn money, it is beneficial to provide them with some guidelines to manage their money. Not allowing them to spend all their money immediately and save money for special purchases helps them appreciate the concept of saving. Helping them learn to wait to purchase items on sale or to say no to certain purchases helps them understand the decision-making involved in money management.
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