All parents want their kids to grow up to become self-sufficient, especially from a financial standpoint.
For that to happen, they must start knocking financial sense into their kids from an early age (as soon as they enter double digits).
While sure, there’s no textbook formula to ensure your children’s financial independence, there are some steps you can take to boost your odds of being successful as a parent, at least in this department.
Check out the infographic below, and feel free to share it if you find it helpful:
Step 1. Get creative with the allowance system (10-13 year olds)
Don’t just hand out their allowance to them. Turn it into an incentivised game, such as “If you make a tenner selling lemonade, I will triple it.” Encourage working for money using creativity, so they don’t take anything for granted. Help them create something, and sell it.
Moreover, teach them to use their skills and passions to create something of substance. Guide them to use their allowance to generate more money, rather than spending it all away.
Step 2. Encourage them to see the behind-the-scenes of movies and games they love (10-13 year olds)
Movies and games are artistic powerhouses. Children love to see how things are created and behind-the-scenes. Show them documentaries about the sets, the teams, and the creative work that goes into making such stuff they enjoy so much.
Find YouTube videos illustrating how their beloved games are made, the technologies behind them, and the budgets. They will become interested in the craft behind it all instead of just consuming content mindlessly.
Step 3. Guide them toward choosing a career path they love (14-18 year olds)
Your kid will likely need some time to find their calling, and that’s fine. Don’t assume you know best. Foster their interests and natural talents. If they wish to make a living out of their passions, support them.
Don’t judge them by your criteria of what it means to be successful. All the business leaders and hotshots you see today are unfeigned creatives doing what they love.
Step 4. Motivate them to learn marketable skills such as coding, design, and writing (14-20 year olds)
Motivating your kids to learn useful creative skills is one of your best bets to secure their financial future. At the end of the day, “job security” is just an illusion, a safety net with limited growth potential.
Having marketable skills under their belt enables them to pursue side hustles and make some extra cash. It will also make them more productive in their free time, instead of squandering it away watching Netflix all day.
Step 5. Condition them to aspire for more than just a conventional job to secure their future (16-22 year olds)
Times are evolving. It’s becoming obvious that we must learn to adapt to find multiple streams of income and even welcome entrepreneurship. So, open your children’s eyes to the various career options that interest them without being condescending.
Expand their horizons by inspiring them to try freelancing and even volunteering on the side. Above all, never tell them their dreams are unrealistic or overambitious.
Step 6. Show them how to live within their means (16-24 year olds)
Stop buying things you don’t need to impress people you don’t like. If you do, your kids will imitate the same. Instead, explain to them the benefits of budgeting wisely.
Show them how to have some serious frugal fun, such as backpacking on a budget. Demonstrate how to record all their expenditures, prioritizing expenses, and set savings goals.
Step 7. Open your own mind to new ways of education (18-20 year olds)
A crushing amount of student loan debt is enslaving the millennials. Your kids don’t have to go through this. Do your research and talk options with them.
Several reputable online platforms offer world-class education for a fraction of the cost. An alternative to a formal, traditional higher education may very well make sense for your children’s ambitions while saving them from the nightmare of massive debt.
Step 8. Teach them how to save money and pay bills on time by automating their finances (18-22 year olds)
Automating finances will forever eliminate their (future) stress of paying bills on time. It will allow them to keep their finances in check, earn solid credit, and restrict overspending.
It means they split their income into various channels, such as a high yield savings account, an investment account, a credit card, and finally all their bills. Once they pay all their bills on time, it leaves them with an actual disposable income to spend on other things.
Step 9. Charge “rent” (18-24 year olds)
Charging rent to your kids may sound a little unusual, but doing so will help your kids get into the habit of making that monthly payment. You can put the collected money into an investment or savings account, which will help build their rainy day fund. So, instead of paying a landlord, they’re paying “themselves” instead.
It compels them to learn the life skills necessary to survive outside and become an independent grown-up. A “rent” also teaches them how to budget their money from an early age, which brings us to the next step…
Step 10. Communicate the importance of having good credit (20-24 year olds)
Teach your kids how to use a credit card wisely. Tell them to consider paying it back in full at the end of the month whenever they want to use their credit card to buy something.
A poor or no credit score makes it difficult to be approved for a mortgage, car loan, or even an apartment. When used correctly, credit cards offer great benefits such as free flights, insurance, and fee discounts.
Over to you
It’s time to start taking these baby steps for your baby. Teaching them financial prudence is critical. So, the earlier you start, the better!
Do you have any tips for fellow parents in the same boat as you? Do share them by dropping a quick comment below.