Breaking the Cycle: How to Teach Your Family Smart Money Habits
Let me engage with you before we begin this article. So here is the thing. Imagine you give two of your kids the same amount of money every day. It was more than enough for them, but they saved nothing. Will you just keep quiet and watch them? I am sure, as a good parent or guardian, you wouldn't just watch as your wards spend. Money habits aren't learned in schools, but rather habits that must be learned at home.
For someone like me, I learned how to handle money when I was almost an adult. I few years into my adulthood, I realized that my ways of spending were hurting my parents financially. We never really talked about money growing up, and all that created for me a cycle of poor financial decision-making.
But here is the good news I have for you: The right ways of handling, managing, and using money can be taught, it can be shared, and also practiced in the family as a tradition. Whether you are a parent, a sibling, a guardian, or a friend, an open conversation is all you need to start the conversation. In this post, I will be sharing with you some practical ways to teach your family smart money habits.
Why Do Family Money Habits Matter
According to the Consumer Financial Protection Bureau, children can begin forming money habits as early as age seven. Now, what does this mean? This means that the way your family talks about money and uses money can affect their relationship with finances.
An article published by The Journal of Family and Economic Issues in 2023 also found that the consistency of family budget and savings discussions leads to better long-term management among young adults. This is to say that trust and confidence are built among families who frequently and actively discuss financial decisions. In short, if we don't teach smart money habits, the world will teach bad ones for us.
How to Teach Your Family Smart Money Habits
1. Start with Open Conversations About Money
I call this first step the transparency step. For many families, especially in my part of the world, Ghana, the subject of money is very sensitive when it is raised. Often, as a result of stress and tiredness, one would barely talk about it. Sometimes, it can also be associated with secrecy or even shame. When you break that silence and have open conversations about money helps your family develop a healthy and positive mindset towards money.
Tips to get started with
- Share your real-life experiences. Talk about your own mistakes(the overspending and late savings) and where you had it wrong, and the lessons you learned.
- Do not wait for 15 years before you include children in the conversation. No, include them early. Tell them money is earned, it is saved, it is spent, and it is given.
- Let financial talks be normal. It could even be once every week or during family discussions.
Tip: If you can't afford something, do not say we can't afford this to instill fear, but instead, you can say, "Let us plan and afford this later". As you do that, you are teaching your family patience and financial planning instead of fear.
2. Create a Family Budget Together
A family that budgets together grows together. Budgeting together teaches the family how to be accountable, how to work as a team, and how to prioritize. You and your family can plan for vacations together and save towards them. Maybe the family is planning to buy a car. Everyone can be engaged in budgeting to help family members learn self-discipline.
3. Teach Through Practical Experiences.
Children and even Adults learn best by doing and not by hearing. Integrate money lessons into the daily life of family members. How would you do it?
Try these hands-on ideas:
- Give kids a weekly allowance but also require them to divide it into savings and spending. This will teach them the wise use of money
- Let teens compare product prices online before purchasing them, but not to go for products that have lower value than the exorbitant prices given.
- Introduce older children or adults to the concept of an interest and savings account.
4. Lead by Example
Actions always speak louder than words. This proves that kids and spouses will observe your spending and saving habits and learn from them.
Be consistent and do the following.
- Save before you spend
- Avoid emotional or impulse buying. You can read more about it from this post: The Real Cost of Instant Gratification: Why Impulse Buying Keeps You Poor
- You can involve your family in giving or donating if possible. It can be donating to charity or helping a neighbor.
Lead by your actions, so wards and others will learn from you.
5. Introduce Financial Tools and Education
Education is the key to success. Many people think that when you talk about education, it only deals with sitting in the classroom to learn, but that is not it; education happens everywhere, in homes, by the roadside, and at workplaces. Education is continuous, and humans are always learning, even from their own mistakes and efforts. It is also a form of education.
So, in teaching your family smart money habits, you can educate and help them learn relevant information about the wise use of money. You can get them books that talk about finance, watch podcasts that talk about finances, and use apps that help with family budgeting. A few examples of these apps include Greenlight, FamZoo, and Toshi Finance.
Financial Wisdom Is a Family Legacy
Do not be mistaken, breaking the cycle of poor money habits doesn't happen overnight. It is a journey that entails small and intentional actions. Every conversation and every budget meeting, including every day goal sharing, helps your family a long way into the future. Build that legacy and let it become a family legacy.
I hope this one was helpful. Thank you for visiting. Have a lovely day.
