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Modeling Good Financial Habits for Your Kids

How do children learn to manage their money responsibly? By watching you do it.

We'd all like to see our children grow up to be prosperous and financially savvy, and it's never too early to get them started.

Here are some ways you can demonstrate for them good financial habits:

OPEN AN INVESTMENT ACCOUNT Teach your children about basic investing by buying securities with them. They'll learn about due diligence and the patience required to let an investment grow to fruition.

SAVE FOR RETIREMENT If your child is working, they can save for a rainy day just like you do. Using retirement accounts offers them tax benefits that make it easier to build savings for later in life.

NEGOTIATE EVERYTHING Many high-dollar items, such as cars and cell phone plans, are open to negotiation. If your kids watch you bargain, it will help them become educated consumers themselves.

TALK ABOUT TAXES That first paycheck is an excellent time to discuss taxes. Walk them through the different types of taxes that are withheld and how they may get some of that back in the future.

PAY CASH Using a debit card or credit card can make money seem infinite, but a wad of bills is all too finite. Give the kids cash for their spending money.

SHOP AROUND Get them in the habit of comparison shopping and avoiding impulse purchases.

MATCH THEIR SAVINGS AND GIVING To reward and encourage good financial habits, offer to match any money your child puts into a savings account or gives to a charity.

Remember, these lessons aren't just about building a better financial future – they're about building a better person.

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