Financial freedom is not something that happens when you win the lotto, get a fancy job or marry a rich person. It can only happen when you build on a solid foundation – and that starts in childhood.
All parents wish that their children’s future will be brighter and more prosperous than their own. Fortunately, you can do much more than wish and hope things will be better for your children. Here are three baskets of actions you can take to put your children on the path to a future that is financially secure.
- Ensure your own financial stability
Your financial stability is a crucial safety net for your family. It means there is enough food on the table so that children can grow and that their bodies and minds can develop. It also means living in a safe environment and going to good schools.
One of the best results of your financial stability, is that your children won’t have to support you when they are adults. Instead, they can continue the cycle of giving their children opportunities. This is called intergenerational wealth, which makes every new generation a bit wealthier than the one before. Achieving this, starts with you. - Teach your children healthy money habits
No one is born with good money habits; we have to learn them. You can prepare your children for future wealth by teaching them:
The value of money – money is an exchange of value; you have to give to get.
Budgeting – the discipline of having a budget and sticking to it is extremely important.
To save for goals – this teaches them patience and the satisfaction of setting and reaching a goal. It also teaches them to not see debt as a solution.
To make wise spending decisions – this teaches the difference between needs and wants, promotes critical thinking and prevents impulsive buying.
The concept of investing – when children understand the power of compound interest and that money can grow over time, it can motivate them to save and build assets.
To manage digital money – this includes using financial apps, understanding online security, and being a mindful online shopper.
To talk about money – make your home a place where you talk about money openly and positively. Encourage children to ask questions and share their thoughts on financial decisions. - Give your children positive money mindsets
How we think about money determines how we make decisions about it and what we do with it. Set your children up for financial success by helping them to think about money in these ways:
– Money is a tool, not an end goal. This mindset encourages you to use money to support your values and goals.
– Spend less than you earn. This helps avoid debt, encourages saving and prioritises needs over wants.
– Investing in your future self. This mindset ensures that you don’t only work for financial security but also for a richer, more fulfilling life.
– Debt awareness. This includes understanding the role debt can play in building wealth, but also that debt has to be managed wisely.
– Continuous financial education. A mindset of always learning more about personal finance helps you to keep making better decisions about your money.
– Adaptability and resilience. This helps you deal with financial setbacks and adjust your plans without losing sight of your long-term goals.
– Generosity and community. Giving back and supporting others gives a sense of purpose and connection, which are important for overall wellbeing.
– Patience and long-term thinking. This involves setting long-term goals and understanding that building wealth is a slow process that requires patience and perseverance.
– Gratitude and contentment. When you are grateful for what you have, it breaks the cycle of always wanting more and allows you to appreciate your achievements.
Above all, remember that children learn most from watching their parents. Your bad money habits will rub off on your children – but so will the good ones. Be mindful, therefore, of how you talk about and behave with money.
What you do and say today, can influence your child’s financial future.
