What do you want your children to know about finances?
On several occasions, I’ve heard people say things like, “My parents didn’t teach me about money.” Or, “All I learned was spend, spend, spend.”
I’ve always tried to teach my children age appropriate lessons about managing their funds. But as a parent, you can’t help but wonder if they’re really paying attention.
So, for the record, I’m going to document a few words of advice. If they aren’t fully listening to me now, maybe they’ll reference this post later.
Always pay yourself.
Set aside a portion of your pay for your retirement savings and emergency fund. Do this first…don’t wait until the end of the month, after you’ve spent your money on everything else. If you wait, all your money will somehow disappear. I find that the best method of paying myself is through automatic withdrawals from my paychecks. Or, you can also set up automatic withdrawals from your main checking/savings account to your retirement or emergency fund account.
In order to determine how much you can reasonable save, you must first track your spending and set up a budget/spending plan. Some people view budgets as being restrictive, but if done correctly, you’ll see that they are quite liberating. When creating a budget, you’re listing all your monthly income and subtracting your expenses. Once you see exactly how your money is being spent, you can decide what modifications to make in order to reach your financial goals. See my Let’s Plan, Save, and Spend post for ways to save extra money.
Be proactive and intentional about managing your finances.
Tell your money where to go – give it a job in advance. Plan ahead and pay your bills on time. Put aside a little bit each week/month toward upcoming purchases or obligations.
Think twice before you spend. Ask yourself, “Does this get me closer to reaching my goal?”
And be sure to pull your free credit report regularly to see if there are items that need to be addressed (e.g. debts to pay, needed corrections, identity theft…).
Also, review and update insurance policies annually or as required due to life changes (e.g. marriage, divorce, birth/adoption of child, beneficiary updates…). Furthermore, shop around for lower insurance rates. Oftentimes, we stick with the same carrier because that’s what we’ve always done. But in some cases, you can save a lot by switching.
And just in case something happens to you, make sure your spouse or some other trusted loved one knows where to access all your important documents (e.g. life insurance policy, property deeds, vehicle titles…) and financial information.
Continue learning and connect with like-minded individuals.
Make a commitment to continue learning about how to improve your financial health. This can be done through various ways, such as reading, watching YouTube videos, listening to podcasts, and attending classes/conferences. Also, get an accountability partner; you may consider joining a common interest group.
I’ve also discussed other things with my kids, but this will do for now.
What financial advice have you shared?
“The best way to teach a child is live an exemplary life.” ― Lailah Gifty Akita
