As a parent, you want to give your child everything. Unfortunately, that usually isn’t the best strategy in the long run, and as a frugal parent, you’re probably already well aware of this. At the same time, it can be difficult to figure out the best strategy for teaching good money habits to your child and reinforcing frugality without making them feel deprived. The tips below can help you pass on good lessons.
Talk About Values
What does frugality mean to you and why is it important? Maybe you are saving money for something specific, believe in a simpler lifestyle, or just don’t have a lot of money to spare. It’s important to identify the reasons for frugality in your family so that you can convey to them to your children in a way they can understand. If the primary reason is simply because money is tight, it’s important that you don’t frame this in a way that will make your child worry about the cost of the basics, like food and rent. Instead teach children to embrace minimalism and learn to be happy with less, without feeling like it’s less. However, you also don’t have to hide the fact that you need to be careful about money. Try to discuss finances in general without attaching too much emotion to the topic.
Plan for College
One of the difficult things for a frugal parent to face is the cost of higher education. There are certainly approaches that are more economical than others, but unless your child gets a full scholarship, college is going to cost some money. In addition to having your child apply for scholarships, you can also start saving when they are young. There are some tax-advantaged educational saving plans that may be right for you. Going to a junior college for two years and then transferring credits can be a great way to save money. You should also look at the cost-effectiveness and return on investment of the colleges your child is considering.
The cheapest option is not always the best choice from an educational and career standpoint, but the most expensive option is not necessarily the best either. Try to evaluate such things as the strength of the department that interests your child and the kinds of jobs graduates go on to. Even if you have been saving for years, it’s unlikely you’ll have enough to cover the total cost of college. One option is a low-rate private parent loan. These are loans that pay for education but that are taken out by the parent, not the student. It can be a good way to help your child avoid graduating with debt, typically burdened by high tuition costs.
Instill a Good Work Ethic
A great way to help your child begin to understand money from an early age is to pay them for chores around the house. Showing them how they can save for things they want, helping them open a bank account, and also allowing them to experience the disappointment of not having enough money for something they genuinely value because of having spent it on something frivolous are all truly valuable lessons. This also gives them concrete, real-world experience with money. Try to avoid common mistakes when giving an allowance to your kids that you will have to correct later on.
Another great way to give them those concrete experiences is by allowing them to participate in family decision-making about how money is spent. These should be carefully chosen alternatives. You might give them a certain amount to decide what fruit they want to buy to take in their lunch, or they could decide between four days in a hotel on the beach or five days in a mountain cabin for the next family vacation. This gives them some ownership in financial decisions and shows that you respect their input.