As parents, our one hope is that our children have a bright and prosperous future full of incredible opportunities. However, knowing how to help them achieve that can be difficult. All children should understand the importance of hard work and financial management.
Luckily, it is possible. The trick is to teach them and kickstart their savings as early as possible. This way, they have the funds and skills to help them throughout their entire life.
In this article, we are going to discuss some different ways to set your children up financially for their future. Want to learn more? Then keep on reading!
Set yourself a reasonable goal
In order to get started, the first step is to set yourself reasonable goals. You’re not going to be able to help your children unless you have a clear understanding of your own financial situation. Assess your income, create a budget and think about how much you can afford. Remember, you always need to take care of the essentials first.
Create bank accounts
Most parents choose to set up bank accounts for their children as soon as they are born, so if you haven’t done it already, it’s an excellent place to start. Aim to have one for spending and one for saving so that they understand the importance of each. This will also make it easier for you to make contributions in the future. Another thing to keep in mind is the amount of interest it will accumulate.
Put away a small amount of money each month
Once you’ve completed the above, you can start putting money away into their accounts. However, this doesn’t need to be a significant amount. Even just $10 a month can add up to almost $2000 before they turn 16. Obviously, the more, the better, but a little really does go a long way.
Help your children establish a credit history
This one might sound strange, but believe it or not, it is possible to help your children establish a credit history by allowing them to become authorized users on your credit card. They can build a credit score which can be used when they need to obtain a loan in the future. Alongside this, it also allows them to understand debt and the importance of paying it back.
Consider investments
Investments are a great way to accumulate money for your children, but understandably you may be skeptical. There is a lot of risk for reward, and you want to make sure you go about everything in the right way. From stocks, shares, and mutual funds, there are many types of investments to consider. Do your research and think about speaking to a professional if you’re not sure where to get started. You can check how to invest in stocks in Canada by clicking the link.
Teach your children about financial responsibility
Having money is great, but in order to save, you need to be able to manage it properly. Teach your children about financial responsibility and how to reduce your costs so that you have more to spend in the long run. Some areas you may want to think about include:
- Energy-saving tips and understanding household expenses
- Shopping discounts and using coupons
- Negotiating and haggling (in certain situations)
- Bargain hunting and researching for the best deal
Create opportunities for your children to earn money
We spend most of our lives working for money, so our children must understand this. By creating jobs and opportunities for them to earn an income, they can save and take on more responsibility. Alongside this, they will establish that more complex jobs generate more money. Some tasks you may give include:
- Mowing the lawn
- Washing the car
- Watering the garden
- Walking the dog
Remember, there are some chores that children should do regardless, as a way of helping out the family. It’s not always wise to give them money for things they should do anyway, such as making their bed or helping set the dinner table.
Help your children create a budget
Above, we talked about how you should create your own budget. Well, now it’s time to do the same thing for your children as well. Allow them to keep track of their money and teach them to review the cost of certain expenses. This way, they will understand the value of specific items. Some other tips to follow include:
- Teaching them about over-spending – If they are saving up for a particular toy but spend the money early, they need to be aware of the time it will take to save back up again.
- Setting goals – If they want something, help them establish an achievable goal. It might be putting away $5 a week for three months until they can afford the item. If they save more, they get it sooner.
- Needs and wants – Some things are essential; others are things we desire. Help them understand the importance of both.
See a financial advisor
Budgeting, investing, and choosing the appropriate accounts can be challenging, especially when you are also trying to manage your own finances. Instead of getting overwhelmed, consider speaking to a financial advisor to help you through the process. They will be able to go over the best course of action for your child so that they have the best possible future. Trust us when we say it can make a big difference.
Set an example
Finally, one of the most important steps to follow is to set an example yourself. We learn from our parents, so being responsible and smart with your money will significantly impact your children’s future choices. Be a role model and an educator so that they can continue along the path of financial success. Even if you make a mistake, show them how to fix it and give them the tools to avoid it.
And that's it! What do you think? Are there any other tips you would recommend?
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