Helping our children form good habits in all walks of life is important: hygiene habits, eating habits, manners and etiquette, safety habits, social habits, cleaning habits, working habits, TV habits, video game habits, clothing habits…the list goes on and on. Below is a list of my top 5 long-term money habits that we need to talk to our kids about early on.
Keep your cash safe:
Cash doesn’t leave a trail of where it’s been or who it belongs to. Your name is not on that bill, and you can’t use an app to track it if you’ve lost it in your home. The best ways to keep track of it:
- Have one place where you keep it, in a wallet or other container. Don’t move it around to new hiding places or you will end up hiding it from yourself and your sneaky brother (same goes for the key to your diary).
- Don’t take the money out of its special spot until you are ready to use it. Take the wallet with you when you are ready to spend and only take the money out of the wallet once you are at the cash register in the store.
- Know how much you have. If you are taking your money outside the house, know how much you are taking and leave some at home if you planned your spending and know how much you need. If you know how much you have and track your spending, you will quickly know if you lose some.
Keep track of your receipts:
Some stores no longer give out receipts unless you ask for them. Be sure to ask for one; it is your copy of a cash transaction and your only proof.
- If there is any chance you might change your mind about your purchase, or that it won’t work for it’s intended use, you will need your receipt to return or exchange what you bought (make sure you know the store’s return policy if you think you might need to return it).
- Sometimes a mistake is made by the store with the quantity you buy, or the price that scans is sometimes different from what it is posted on the shelf or flyers. Be sure to read over your receipt soon after you’re done shopping to make sure this hasn’t happened.
- Develop the habit of storing your receipts in one place, until you are ready to record it. Review them against your monthly budget, or check your credit card or bank statement if you are using a credit or debit card to shop. Mistakes can still be made at this stage too. Once that is done, only keep the ones you need such as expensive purchases that may have a warranty. If there is a warranty issue, they will ask for proof of purchase.
Keep personal information personal:
It is important to keep your bank and credit cards’ PIN numbers and your computer login password private. Do not tell anyone or let them see you enter it on the keypad..
- In today’s technology age we are required to use passwords to do a lot of stuff and it is hard to keep track of them all. Make your bank passwords your most important one, if you want to keep a paper record of your information, make sure it is safe at home and never keep the user name (or card number) in the same place as the password.
- There are certain people that you can hopefully trust with your information, your immediate family is the best place to start, have them keep a backup of your numbers and passwords in case something happens to you and you are unable to handle your own banking for a little bit.
- Don’t ever speak it out loud in public, nor email or text your banking information to someone you know, your communication might get seen or intercepted by someone you don’t know.
- Don’t ever answer an email request for banking information from someone you don’t know, even when they claim to be part of a company you regularly do transactions with. A bank will not request information by email.
Know where your money is going:
Give every dollar of income a job.
- Make a plan, or a budget, for all your incoming money, for every dollar you receive, know what your priorities are and where you need it to go.
- Learn to live on last month’s income. Money that comes in during the month of April should be used to create your spending plan, or budget, for May. This way you aren’t making a plan on an unknown amount of money that hasn’t actually become yours yet. (More on this concept in making your budget work LINK)
- Do not lend money to friends or family if you can’t afford to live without it forever. You might get your money within the terms you agreed upon, but you might not, even if it is a good friend. If you have the expectation of getting back the money you loaned to a friend, be prepared to possibly lose your friend too. It might cause a break in the relationship, so be prepared to walk away from the money.
- Do not borrow money (from a bank or a friend) without a clear written schedule to pay it back. Make a strong plan to come up with the money for every payment — find room in your budget first. An even better plan is to find room in your budget before you need to borrow and start saving this money for an emergency or buying the thing you desire outright, without a loan, or with a smaller temporary loan.
- Pay yourself first. This concept means putting money towards your very long-term retirement savings first. Saving even a little while you are young, combined with compound interest over time will make it worth the investment later in your life.
Decide how you want to spend your money:
Pay attention while spending your money. Think it through, talk to someone else about your purchasing ideas, be sure and then think about it again.
- Learn the difference between a want and a need. Everyone values things differently and from this they establish the distinction between a want and a need, help your child work this out early on.
- Don’t make shopping an entertainment activity. It shouldn’t be something you do when you or the family is bored. If you want to browse, do it without your wallet, if you find something you really want to spend your money on, come back at a later time to buy it.
- Never go to the grocery store on an empty stomach.