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Harris-Courage & Grady, PLLC Sept. 15, 2015

If you could go back in time and avoid all of your financial mistakes, your life would probably look a little different. Though it’s never too late to make improvements, it’s much easier to prevent problems than it is to solve them. You can help your children avoid financial difficulties. Financial wisdom is one of the best gifts you can give your children.

Here are 5 financial principles to discuss with your children:

  1. Consider the real cost of what you buy. A $500 iPhone doesn’t just cost $500. When you spend money on one thing, it isn’t available to spend on something else. If you invest it at 10%, $500 could grow to almost $27,000. This is called opportunity cost.

  2. Use a savings calculator. There are free calculators available online that are a great way to show how consistently saving a little money each month adds up. This can help make saving money more enticing.

  3. Teach them about debt. The average US household has over $7,000 in credit card debt. Imagine how your life would be if you were debt-free, and how much extra money you’d have if you didn’t have to make monthly payments. Teach your child not to fall into the debt trap. Teach them never to buy something on credit they couldn’t afford to buy with cash.

  4. Teach them how to save. Many people pay the bills, have a little fun, and then plan to save whatever is left. There’s rarely ever anything left with that approach. Teach your child to pay themselves first by immediately saving 10% of every dollar earned. If you’re not in a habit of saving yourself, now is a great time to begin!

  5. Teach them to give. Allow your child to choose a charity and donate to it regularly, even if it’s just a few dollars. Your child will come to see that giving affects them as much as it does the organization receiving the money.

Help your children develop the financial habits they need to be successful. Improve your own financial habits while you’re at it! Teach them how to manage their finances, and you’ll set them up for a lifetime of success.