Children often learn their first lessons about money from the adults they’re closest to. Whether it’s listening to parents discuss a purchase or watching them pay bills online, kids are observant and their relationship with money is often shaped by what surrounds them. If you are a parent looking to instill financial wisdom in your children, here are some ways to get started.

Set a good example. Kids often model what they see. Be intentional about the example you’re setting. Proactively discuss money with your children. Talk about what’s important to you money-wise and use everyday moments to bring it to life such as bringing them along when you speak to a financial advisor or consider an expenditure.
Share knowledge. You can give your kids important life skills by building their foundation of financial knowledge. Shape good habits with simple lessons about how to track spending or saving up for something special. Why wait until they’re on their own to talk about the value of good credit or to explain how compound interest can make savings grow? Talk about the rewards (and challenges) of delayed gratification and the perils of debt. As they get older, emphasize the importance of financial security and the value of professional guidance.
Encourage goal setting. Instill the habit of goal setting early. Discuss your own goals – such as paying for a family vacation or saving for a new car – and how you follow through on them. Encourage your children to set a goal or two of their own.
Reinforce the value of work. Children learn the value of a dollar sooner when they are exposed to the effort that goes into earning each one. Consider whether you want to provide an allowance or pay them for helping with chores. When they start a part-time job, talk through the various ways they can allocate the money earned. It’s human nature to be more careful when spending your own versus someone else’s money.
Introduce the concept of budgeting. Budgeting doesn’t have to be a negative concept. Having a spending plan can be empowering because you know exactly what money is going to meet each need and goal. Start explaining this concept early on. Kids should understand that you impose limits on your own spending, and why it’s important to live within your means. For example, a trip to the grocery store can be an opportunity to share why you make the choices you do.
Model philanthropy. If giving back to the causes you care about is important to you as an investor, it can be impactful to show your children the power of giving. You might suggest they apply a save-spend-share philosophy toward their own money. The idea is to set aside a portion of their allowance or earnings for future wants or needs, spend another portion on today’s wants or needs, and give a portion to causes they care about. Whether it’s enacting a spending philosophy or having a conversation with your child about how you use your money to give back, passing down your philanthropic values can be a rewarding experience for both parties.
Be a resource. Most kids make a few financial mistakes as they mature into adults. Let them know they can turn to you for guidance. Encourage them to continue to build smart money habits and remind them they don’t have to navigate their financial journey alone.

Daniel P. Morrissey, CFP^®, CFS^®, CRPC^TM, is a Private Wealth Advisor with Heartland Wealth Advisors a private wealth advisory practice of Ameriprise Financial Services, LLC. in Lebanon, Pennsylvania. He specializes in fee-based financial planning and asset management strategies and has been in practice for 40. To contact him, go to www.heartlandwealthadvisors.com or call (717) 270-6937 at 1536 Cornwall Road, Lebanon, PA 17042.

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