What are the 3 essential money habits to start teaching your kids? (Habit 3)



This is the final part of a three blog series covering three money habits to help make your kids rich.


If you take the actions set out it will make a significant and positive impact on your kids’ future financial wellbeing.

Your kids’ financial wellbeing will be determined by the money habits they form. Let’s make sure they form three good ones!


Here are the 3 essential money habits to start teaching your kids:


Habit 1: Get them to put away 10% to 20% of money they receive for the long-term


Habit 2: Get them to save up for something they want to buy


Habit 3: Get your kids to record how much money they have each month


There are other money habits you can teach your kids but these three are my ‘essentials’.

If you haven’t read the first two blogs in this series then I’d recommend you read those first:



Habit 3: Get your kids to #Record how much money they have each month


This simple task is to make sure your kids know how much money they have each month (or more frequently).


This includes knowing how much money is in their money box, their savings accounts and anywhere else. Make sure they record this somewhere. Not just look at a number on a screen or piece of paper, they need to write the balances down or type them into a spreadsheet or tool. It has to be an action in order for it to become a habit. We don’t really take in what we just look at.


Make sure you are not hiding any savings away from them which you plan to give them later. By letting them see how much they have, they can start to see it as their money which they ultimately need to be responsible for. It also teaches them about savings as they witness the amount grow over many years.



Why is this such an important habit?


Most adults don’t know how much they have and this leads them to over spend and to go into debt. Having a clear picture of how much you have means you can see progress and this is the start of learning to budget.


“What gets monitored, get managed”

It also helps in other ways:

  • Helps them consider money for about 5 minutes a month

  • Helps them see progress in terms of their money growing

  • Gets them to ask questions about why their balance went up (or down) over time

  • Opens a dialogue about money with parents and therefore reduces its taboo status



How to help your kids create this habit:


1. Find somewhere to keep a record of their money in different places


  • Start by getting a notepad or a spreadsheet (or use the Blue Tree Habit Maker tool)

  • It needs to include the date, the names of the different places where they have money, a total and how much they saved (this is the difference in the total from one month to the next).

  • Keep it simple! The more complicated you make it, the harder it is to update and the less likely they will make it a habit.


Here’s an example:


2. Get out your phone and put in a reminder with the title “Create life changing money habits for kids” to repeat each week or month


3. At the end of the week or month get them to update the record with how much they have. It should only take 5 minutes maximum.


4. Talk to them about how this has changed since the last time you sat down.


If they have been following Habit 1 (see my earlier blog), then the long-term amount should increase by at least 10% of any money they received over the last month.


A few points to note when doing this:

  • Only record what money they have at that date. Don’t record for what they will be getting or spending in the future. These amounts will come through in future months.

  • If you want to make the process more engaging by converting money into something they care about or which is easy to visualise, then you can use the Blue Tree Sharing Tool. This tool converts money invested into Blue Trees so they can see their forest growing over time.


Last word


There you have it - this completes this series of three blogs on three essential money habits to make your kids rich. Start today to make a big difference to your kid’s financial future.


A recap on the three essential money habits to start teaching your kids:


Habit 1: Get them to put away 10% to 20% of money they receive for the long-term (read more)

  • Every time they receive some money, have a place to put 10% to 20% of this money away for the long-term (not to be spent).

  • Parents to find best ways to make this money grow, ideally having an investment account (more on investing here [LINK]).


Habit 2: Get them to save up for a reward they want to buy (read more)

  • Get them to choose something they want, to be patient and save up for it.


Habit 3: Get your kids to record how much money they have each month

  • Sit down with your kids each month and get them to record how much money they have.

  • The Blue Tree Habit Maker makes this super easy and fun to do!


To get a sense of how important these habits are, imagine if you had saved 10% of all the money you had received since you were a child. Imagine that money doubling every 7 years as it was invested. Imagine you only bought items that you really wanted and saved up for.


Imagine you knew how much you had and saw that money growing each month. I’m hoping you see a positive picture. This could be your kids new reality.


I hope you found these blogs useful - if so, don’t forget to share them with other parents so they can start helping their kids form good money habits.


I’ll be writing more blogs to help you teach your kids about different money related topics such as budgeting, debt and scams over the next few weeks so make sure you have subscribed.


In the meantime, here are a list of related blogs and books for you to read:


Blogs you should read:


Recommended books:

Full list of books and games to help your kids learn about money here


Thanks for reading!


Will


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