How To Give Your Children The Best Start In Life Financially

August 16th, 2015 Posted in Investing|Personal Finance

how to give kids the best start in life financially

 

 

 

 

 

Teach Your Kids Good Money Habits

As the old saying goes “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” The same, or at least similar, applies to giving your children the best start in life financially. If your children are forever coming to you asking for money, it can be very hard not to give them a few dollars, especially if they have been well-behaved recently. However, this is something that should never become a habit. After all, you had to learn at some point that you cannot keep relying on other people. The message is that if you can save some of what you get from time to time, and find a (legitimate)  way of making to money it will stand you in much better stead for the future.

This is not a case of advising people to never give their children money. It is true that your children need to learn the value of money, but this is no more likely to be learned by giving them nothing than it is if you give them money every time they ask. All that you guarantee by withholding money every time is that they will one day start making money for themselves and rebel against everything you told them by spending like an heiress in a street full of boutiques. There is a sensible balance to be struck. If your child has a good reason for asking for the money, that scores a point. If they are not asking for much, that scores another. If they really do not ask all that often, then they deserve another point.

You can come up with your own points system, but do your best to make it fair while not being excessively flimsy. How likely is it that a child who knows they will get everything handed to them will grow up understanding that money needs to be earned. The old saying “Money doesn’t grow on trees” may be irritating, but it is also true. It has to come from somewhere, so it is worth encouraging your child – once they are old enough – to get a job which they can do on weekends earning just enough to pay for their leisure pursuits. This doesn’t mean you need to stop paying their way – it is even better if you top up what they earn with a little from your own pocket to show them that good behaviour is well rewarded.

There may seem to be some madness in the above stratagem, but rest assured there is method to it. Giving your child a decent appreciation of the benefits of working for money, a recognition that they cannot rely on someone to just hand it to them, and yet the reassurance that you will not turn them down if they really need help, is the strongest way of reinforcing the lessons of good financial behaviour, and your child will be more likely to thrive financially in times to come.

To streamline and minimize blog maintenance, I will be discontinuing maintaining the Canadapersonalfinancewebsite.com website (however, I will still hold the domain). I will gradually move all articles from this site to A Dawn Journal. This article originally published on the above website on July 19, 2009.

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