How to teach your kids and grandkids good money habits

If you have done all the hard work throughout life of being responsible with money, you’ll definitely want to impart this wisdom to your kids and grandkids. The problem is, most kids don’t want to sit still at a table while Pop teaches them how to write a check. It’s hard to communicate the right information to kids, especially when understanding the concepts involved takes more than passive observation.

Here are some reliable ways that parents, grandparents, and guardians can help children develop good financial habits that will last a lifetime.

The best thing to do in general is to model good habits, and to talk about them as you do so. Kids may observe that you don’t spend money wildly or buy many things on credit, but unless you tell them about it they probably won’t catch the details. Many parents feel that it is important to keep kids in the dark about the family’s financial situation, but if you are able to get your kids’ attention while making the right kind of financial choices like saving, paying off debt, and investing, they’ll start to understand these behaviors and naturally do themselves in the future, because that’s the only way they know.

You can also set up accounts for them which they can manage themselves, according to their skill level, responsibility, and interest. A simple investment account with Betterment investing can help kids learn about investment, and start them early on the road to wealth building. Betterment is an example of a robo-advisor service which picks ETFs and funds for the investor. This is a great option for children, who almost certainly won’t have the interest or financial savvy to choose their own portfolio contents. You can also start a spending or savings account, get a limited credit growth credit or debit card, or simply help your kid understand cash with an allowance. Whatever you do, make sure your child has experience actually making decisions about money which have real world consequences.

You should also keep up to date with the modern financial conversation. Personal finance is changing rapidly as technology revolutionizes the space. This has been covered by numerous top financial blogs who write about fresh money events, so you should be able to keep up to date without trouble. Specifically, follow new events about automation, financial data security, scams, etc. Teaching kids about money in 2017 isn’t anything like it was in 1997, when cash and credit were just about the only topics that mattered. Today’s money is complicated, and kids can develop complicated problems if they aren’t prepared.

While it’s great to help kids avoid financial mistakes, sometimes you have to be willing to let them fall on their faces, as long as you don’t let them make a mistake they won’t be able to recover from. Money that is poorly spent, small debts that rack up, opportunities misses – all of these are learning opportunities. Try to be aware of your child’s financial life to the extent that you can spot problems ahead of time, and let them make the ones that are small enough for them to recover from and fix themselves, perhaps with a little guidance from you.

Of course, it’s possible to overexpose your kids to many, causing them to worry about the future or develop an obsessive mindset about the subject. On the other hand, keeping kids ignorant about how money works will set them up for failure in the real world. Make sure to model great behaviors, explain as you go, give your kids chances to use money themselves, allow them to make small mistakes, and provide support and guidance all along the way.