Smart Financial Moves to Make for Your Kids

It can often take people years to get their financial picture in order and once they do, they think, “If only I had started thinking about this earlier.” With that in mind, one of the greatest gifts you can give to your kids is a head start to financial security. Here are a few tips on how to start:

Encourage them to earn (and save!) money. It’s great to give kids chores to do around the house for a small allowance or to encourage them to pursue odd jobs like babysitting, snow shoveling and gardening. This will keep them away from the TV or video games and hopefully teach them the value of a dollar. As they start to collect money with regularity, make sure you discuss how important it is to save some of their earnings for the future.

Teach your kids about budgeting. When it comes down to it, the key tenet of financial peace of mind is to spend less than you earn. Letting your kids know this early on will help them understand the importance of budgeting and keeping their expenses low.

Explain compounding interest. Another good incentive for teaching your kids to save is to explain to them early on just how quickly their money can grow if they start saving at an early age. One hundred dollars now will be worth almost $150 five years from now at an interest rate of eight percent. This also means they’ll be able to save less later in life!

Start a 529. Starting to save for college when your child is young will be a huge help to them. It will show them that you value education and help minimize the amount of student loans they may need to finance their education, giving them a huge advantage after graduation.

What are some ways you’re helping your kids learn about good money management?

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*Guest Post by David