Finances & Children

Being a father of four children, I'm becoming more experienced in this topic. My wife and I were also raised in large families and have discussed the various financial lessons we did or didn't learn as we were growing up. As my children get older, I want to make sure I'm doing what I can to pass on some sensible financial management skills, even if none of my children follow in my footsteps professionally.

The most critical thing a parent can do is to set an example of sound financial management. Even though we are all unique and born with different personalities, we tend to model some of the parental behavior we saw as children. Although I understand financial principles and could "justify" certain financial decisions, I try to consider the message I'm sending to my children. I can already sense the natural approaches my children might take to money by the way they manage their piggy banks, but I will never regret the positive influence I may have on their future financial decisions.

Example aside, what are some other things we can do as parents to teach our children sound money management skills? I suggest giving them financial responsibility at a relatively young age. This can be done by providing an allowance with expectations or helping them participate in entrepreneurial activities. Handing children money with no expectations doesn't encourage much learning, but adding some responsibility to meet obligations can encourage simple prioritizing or budgeting at a young age. Many children also like to participate in childhood businesses like lemonade stands, recycling, yard care, or babysitting. These activities teach important business skills at a young age before the decisions become more critical and life altering. These skills can also be taught through games like Monopoly or computer games like Lemonade or Zoo Tycoon. I try to make learning these skills fun for my children at this age so they are prepared for the time when money isn't always so much fun anymore.