It is a well-known fact that our financial behavior is a product of our social norms, culture, and experiences – the ‘things we learn’. But have you ever considered how financial patterns are similar to genetic traits? Various researches provide substantial evidence that our financial behavior is inter-generational. 

Parents are more likely to influence their children’s financial behaviors and are hence the key to securing their financial future. Financial behavior patterns are established early on in life through learning, socialization, habits, and role modeling. Having parents who have good financial practices is a great resource for little ones starting on their own. 

The blog talks about how parents’ financial behavior impacts that of their children and how can parents inculcate good financial behavior in their children to help them secure a financially stable future ahead. 

Parental Influence on Kid’s Financial Behavior 

1) Inculcating general self-control 

Parents should encourage their children to develop good habits early on in life, through financial games like Monopoly, children’s books on money, and through fun activities. These resources help the students to develop a general understanding of how money works and practice self-control on their spending while learning to save and invest. Parents can also set monthly spending limits and reward the kid for any savings.

Nowadays, children are exposed to financial information and opportunities much earlier than their parents. Thus it is critical for parents to instill a sense of financial responsibility in their children. As parents become more involved with their children’s financial lives, they should consider investing time, reading materials, or developing personal relationships that will allow them to monitor their child’s spending patterns and goals. 

2) Encouraging skill development 

It is a well-established fact today that attitudes towards money and savings have changed in recent decades. More and more young people now aspire to reach financial independence early on in their lives. For this purpose, they look for ways to upscale their money through a variety of avenues, including savings, investments, scholarships, and loans. 

Professional psychologists recommend introducing children to investing. You can explain to them how investing works and which services help to meet this goal. For example, create an account at dotbig for them and show them the basic instruments.

Financial decisions should not be left to chance but rather governed by sound financial practices. Children need parents who will teach them how to save and invest their earnings to help create better education opportunities in the future. Financial behavior is important because it affects our life chances and opportunity to succeed. The most important thing for children to learn is the value of money – how it gets earned, spent, and saved. 

Instilling Good Financial Behavior in Kids 

1) Finding the best online deal 

Parents control the purse strings, but do they always realize how their financial buys affect their little ones? As more and more parents turn to online shopping for their children’s needs and services, experts agree that it’s a perfectly healthy way to save parents money, helping kids find the best bargains, and teach them the value of managing their money.

2) Exploring the product price beforehand 

When children know the price of the stuff they are buying, it will help them control their spending and make informed choices about the things they get. They should be encouraged to talk to sellers to obtain information about the things they are selling and whether they are fair prices or not. By helping your kids to make smart financial decisions as early potential customers, you can instill good spending habits in them. 

3) Differentiating between ‘Needs’ & ‘Wants’

 Parents who are experienced in financial planning have a positive effect on their children’s behavior by helping them differentiate between the ‘Needs’ (essentials) and ‘Wants’ (non-essentials). When parents have a solid understanding of their family’s finances and the financial needs of their children, they can set a good example for their children by passing down good habits and helping them learn to act responsibly.