Teach kids financial lessons for the new year

FALLBROOK – At the dawn of a new year, many adults resolve to make positive changes in the year ahead. But New Year's resolutions aren't exclusive to adults. In fact, New Year's resolutions provide a great opportunity for parents to teach their kids about setting goals and maintaining the discipline necessary to realize those goals.

Many adults express a desire to save more money when making their New Year's resolutions. Parents who want to instill financial responsibility in their children and encourage youngsters to save money right alongside mom and dad can do so in various ways.

Start giving kids an allowance in return for doing their weekly chores. This teaches kids that they must earn their money and also teaches them to budget. Resist the temptation to give kids extra money or advances on their allowances, as doing so can compromise the lesson that kids need to budget.

Kids can benefit just like adults by setting specific financial goals. If kids have their eye on a new gadget or gaming console, encourage them to create a savings log that tracks how much they're saving each week and how close they are getting to reaching their goal. As kids' balances increase and they get closer to their goal, they may grow just as excited as adults do when they see their investments perform well.

Another great way to encourage kids to save money is to match the deposits they make into their accounts. Whether it's teenagers saving for their first car or younger kids saving for a new bike, kids may be more likely to save if they know their contributions are being matched. Parents can explain that matching is not just for kids, as many moms and dads benefit from employers who match their retirement contributions.

Let kids make mistakes. Everyone makes mistakes, especially when it comes to money. Many adults feel the best financial lessons they learned were a byproduct of a mistake they made that forced them to reexamine their approach to money. Letting kids make financial mistakes now may help them avoid bigger and more costly mistakes down the road.

Teach impulse control. Another valuable financial lesson parents can instill in their kids is controlling their impulses with regard to spending. Many adults exercise impulse control by waiting 24 hours to make purchases. In this scenario, adults who see something they like online or in-store that they did not intend to buy will wait a day after seeing the item before deciding whether or not to purchase it.

That 24-hour waiting period often prevents people from buying products they don't need. Kids can benefit just as much from following this guideline. In the interim between seeing the item and deciding whether or not to buy it, discuss with kids the pros and cons of buying the item. This can teach them to carefully consider each of their purchases, making them more responsible consumers for the rest of their lives.

New Year's resolution season provides a great opportunity for parents to impart valuable financial lessons to their children.