Are money habits hereditary

Teach your child money for life

For most adults, the first money-management brush came in the form of a porcelain pig. A nickel here, or a dollar for every job or good deed done. Most of the financial responsibility ended up with the piggy bank. Many generations of echo boomers - born between the 1970s and early 1990s - agree that learning how to spend, save, and invest wisely was not part of life's lessons. "I wish I had understood the value and properties of money at a young age," says Christopher Rogers, a 33-year-old New York citizen and assistant director of a financial services company. "Although I grew up in a successful family, no one really impressed the value of money on me until I started it myself, and only recently."

Indeed, piggy banks may not be enough to impress healthy savings habits among young people. Especially these days. Many Americans step in to be reactionary to the Great Recession, buckle and save after things bottom out. In the face of a deteriorating job market, a fragile real estate market and the risk of a recession in two recessions, more and more consumers are changing their buying habits and showing a renewed commitment to saving - a behavior we have not seen in the last few decades. The generation born during the Great Depression of World War II, considered by Tom Brokaw to be "the greatest generation that any society has produced," had to pull themselves up by his boot straps to bring food to the table. At the same time, they left behind a life of considerable sovereignty and privilege for generations to come, and distorted the idea of ​​what it means to work hard, survive, sacrifice, and value every dollar earned. According to a study by Fidelity Investments, Generation Y individuals hold an average of more than three credit cards, with a fifth having more than $ 10,000 in credit, and a quarter of respondents believing they will never be free of credit card debt for their lifetime will be. Today, parents learn from their own mistakes and are more anxious than ever to pass solid financial habits on to their children.

[See 11 Ways To Prepare For A Double-Dip Recession.]

It's obvious that kids these days lead a more extravagant lifestyle - full of trendy wardrobes, smartphones, video games, and other expensive gadgets - than their parents. And it doesn't help if parents simply spend money without restrictions. After graduating from high school and flying the co-op, many teenagers are likely to be plundered by exorbitant debt, making it extremely difficult to buy a car or home due to poor creditworthiness.

So how can you teach your kids the importance of saving, taking into account their expenses, and being self-disciplined? Here are some parenting money management strategies and tactics that can help children take control of their financial futures:

Be committed. "Like learning a new language, developing athletic skills, or learning to be a master musician, financial flow takes time, practice, intention, and the acquisition of financial language and values," says Joline Godfrey, author of Raising Financially Fit Kids, emphasizing the importance of financial Your child's competence to be committed. "This is a process, not an event. Parents who start early find that good financial values ​​and behaviors are more deeply built into children's life skills and habits when they make their financial expectations as consistent and clear as brushing their teeth and that Brushing your teeth have to do homework.

Most parents understand that a few hours on the tennis court would not be enough to prepare a teen for competition. Similarly, a poorly managed grant and some "Spend Less" lectures are not financial literacy! "

Money doesn't grow on trees. It doesn't magically appear on ATMs either. Children should learn early on that to make money they have to work. Ask them, "Do you know where the money is coming from?" When you go to the bank or withdraw money from an ATM, explain to your child that it is your money in your bank account and that you worked for that money.

Weekly allowance Parents can pay their child a weekly housework allowance, be it washing dishes, mowing the lawn, tidying up their room, babysitting or other age-appropriate chores. You can track tasks or good behavior on a graph and see what was achieved that day. At the end of the week, you can pay them for their services. Divide the weekly allowance into different envelopes, e.g. B. "Entertainment", "Clothing" or "Savings".

[See Kimberly Palmer's Alpha Consumer blog, which provides world-class personal financial advice on a daily basis.]

Show them your monthly bills. There's no need to be differentiated with your personal finances, but showing your kids bills like mortgage, electricity, utility, cable, and car insurance can help you see what it costs to run a household. You can even show them your bank statements. This will help them learn how to make deposits and withdrawals.

Shop together. The grocery store is a great way to show kids how to save money. You can use the items on your list and compare prices between products to help kids look out for cheaper brands. Use suitable items such as chocolate chip cookies or milk for the little ones.

Use online games and websites. A fun way to get young kids interested in money management is through online games. For example, T. Rowe Price and Disney developed the Great Piggy Bank Adventure Financial Education Game, a virtual board game for children ages eight to 13 that teaches them the basics of setting goals, how to save and spend meaningfully, and use different ones Opportunities offers investment strategies for growing assets. The Kids.Gov website also has a number of online resources to help parents teach their children about money.

Get a job, make a budget. When your child turns Sweet Sixteen, you will need to get a part-time job. The money they earn can be used for things they want, like clothing, gadgets, or entertainment - but only if it falls within their budget. Your child may not have enough money to buy an iPod, such as weekly transportation or car expenses.

Open a savings account. Make your children a habit of saving by opening a savings account to which they will contribute a certain amount each week. Set realistic goals and work with them on how to achieve the goals. The account teaches them to save regularly. Reviewing the monthly bank statements will help you understand the concept of accrued interest.

Develop your entrepreneurial spirit. Landing a job and making the most of it can help your child stand out from the pack. "Twenty-first century children will approach a career with the idea of" doing a job, not just getting a job, "says Godfrey." Since unemployment is well in the double digits for teenagers and the 20-year-olds, entrepreneurial ones become Skills and prospects can be a competitive advantage. "