When was the last time you spoke to your children about money?
A financial education is an important foundation for success later on in life. Just like in chess, where a strong and solid opening at the beginning of the game ensures a steady position in the future, a solid financial education can lead to riches down the line.
Teach your children proper money habits at a young age so that they will be skilled with money as adults.
The 3 most important money skills your kids need to know
Personalize your finances
Personal finance is called personal for a reason – there is no “one size fits all.” No one becomes rich by giving into peer pressure. Teach your children to evaluate their own situation and spend accordingly. Other people’s financial practices may cause them harm if they develop the wrong habits, like accumulating big credit card debts or having no savings account. Everyone needs to decide the best financial move based on his own individual situation.
Teach your children the importance of goal setting. Make sure the goals are both realistic and have real-life incentives. If financial goals lack those traits, they will be impossible to achieve.
Help your children understand what is most and least important. Teach them how to distinguish between what they want and what they need. Focus on buying what is needed, and not what is wanted.
Tell your children stories from your own life about times you had to prioritize different expenses. Explain to them, for example, how you first put aside money for charity, emergency funds, and long-term savings before you spent money on a spontaneous purchase or a family vacation. You may even want to share a story about sacrifices you had to make due to prioritizing, such as not going out to eat until your emergency fund was fully funded.
The best way to teach your children about successful personal finance is to provide them with a positive role model.
Do you want your children to be financially aware? Click here to learn what financial facts should be taught in school but aren’t. Make sure that you, as parents, fill in the cracks.
Douglas Goldstein, co-author of Rich As A King: How the Wisdom of Chess Can Make You A Grandmaster of Investing, is an avid chess fan, international investment advisor and Certified Financial Planner (CFP®).
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