With Father’s Day on Sunday, you might be reflecting on all the ways you raise and care for your children. As a parent, you know that every move you make, from changing a diaper to deciding on a car, can impact your kids.
And while there’s certainly more to parenting than providing for your family financially, your fiscal decisions and habits undoubtedly affect your children.
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Here’s my best financial advice to fathers who want to wield their budget and money management skills with their kids in mind.
Save for What’s Important
You know that saving is important to the well-being and security of your family. It’s harder to remember that the savings themselves don’t matter. What matters is the products of those savings: the experiences, security, and enjoyment that they allow.
Putting aside money in these three saving categories will have a positive impact on you and your kids for years to come:
- A vacation fund. Some of my best family memories come from vacations. A vacation provides quality family time away from day-to-day stresses and routines. Getaways don’t need to be extravagant, expensive, or extensive to be meaningful. From camping trips to extended family visits to international travel—vacations come in all shapes and sizes. The common denominator is sentimental value and fun family bonding.
- A college fund. A university education isn’t getting any cheaper, and students are graduating with more debt than ever before. Since a secondary education opens the door to a wealth of opportunity, one of the greatest investments you can make is in your children’s college educations. Your kids will be grateful for your contribution to their future success.
- A retirement fund. Your children want you to be happy and healthy. Investing in your own retirement will help to ensure that you can be there for your children down the road, in good spirits and in good health. (Retirement can also come with an auto insurance discount.)
Teach Your Kids Good Money Management Habits
If money is the root of all evil, then it’s a necessary one. Keeping your kids in the dark about money and fiscal responsibility will disservice them in the long run. Start to teach them good money management skills at a young age to set them up for sustainable lifelong habits.
Open a savings account for your child when they’re young, and when they’re a bit a older, open up a checking account. Teach them how to keep track of what they spend and how to use a checkbook. For a present one year, buy them stocks or bonds so that they can learn firsthand how the market and interest works.
Hold your kids responsible for managing their money (or some of it). Give them an allowance so they can personally save up for "want" items. This will teach them the value of money, saving, and long-term gratification.
Help them find their own source of income when the time comes. Encourage them to get a summer job when they’re in junior high or high school. You can help by giving them feedback on their resume and telling them about the job that you had when you were their age (they’ll get a kick out of it).
Chances are, your children will learn the most about money and how to use it in their own home. Rise to the occasion and teach them good habits.
Involve Your Kids in the Household Budget
Being transparent about your household budget will benefit your family. Include each family member in a discussion about money-related priorities rather than assuming what your kids want and expect when it comes to household spending.
You may find that your kids are willing to make compromises and sacrifices in some areas of expense or entertainment, like cable television, in order to have something that’s more important to them, like a family trip. You know it better than anyone: your kids are smart. And they may capable of understanding more than you think, including what they want family funds to go towards. By giving your kids a say in budget priorities, you prioritize your kids.
Don’t Forget the Basics
Your fatherly duties are demanding, but don’t overlook these finance basics:
- Get proper insurance. Look at your insurance as an investment—in your own savings, health, and family—rather than as an expense.
- Pay the bills on time. Getting behind on paying bills can cause unnecessary expenses and hassles.
- Automate your budgeting. Useful budgeting tools can save you time that is better spent with your family. Try Mint.com or a smartphone app.
- Future fathers, don’t underestimate the expense of kids.
Money can’t buy happiness, but handling it well can ensure that your children feel loved, included, independent, and confident. For Dad, that’s pretty close to happiness.
Photo credit (top photo): Matthew Dinkel