7 Financial Habits to Teach Your Kids

The great thing about children is that their minds are constantly expanding. Thus, they're open to learning from those around them, and that includes you as a parent. With that in mind, here are a few important financial habits it pays to instill in your kids while they're young.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

A budget is crucial to managing money and meeting savings goals. If you have a household budget, consider sharing it with your children so they understand where your money goes and how you go about setting priorities. And if your kids get an allowance, you may want to help them write up a budget for that money. Maybe they'll spend some, save some, and earmark some for charity.

ALSO READ: Turn Your Child Into a Tax-Free Millionaire for $25 a Day

We all need money in the bank for a rainy day, and teaching your kids to get into the habit of saving is one of the most important things you can do. In fact, it's a good idea to open a savings account for your children and explain how interest works. They may really like the idea of getting paid to keep their money locked away.

Spending money aimlessly is a good way to hurt your savings goals. That's why it's important to train your kids to always be on the lookout for the best deal. A good way to teach this lesson is to have your children compare prices at the supermarket, or when you're out shopping for different things, so they understand that there's no sense in paying $4 for a box of cereal when a comparable one can be bought for $2.50.

Investing money is a great way to grow wealth, and it's an important habit to get your kids into. A good bet, in fact, is to open a custodial brokerage account that you manage, but let your children pick stocks they want to invest in. They may opt for companies they're familiar with, but that's OK. The key is to show them what they stand to gain by putting their money into stocks.

ALSO READ: 5 Stocks That Make Great Gifts for Teaching Kids Investing

Racking up debt is a costly, destructive habit that hurts countless adults each year. That's why it's important to teach your kids to never spend more money than they can afford to part with. You can even be honest with them and explain your own financial limitations. For example, if they ask why you can't take a repeat trip to a theme park resort, you can explain that you didn't save up for it and don't want to accrue debt to pull a trip like that off.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

The temptation to spend money on a whim will always be there, so it's important to teach your kids how damaging impulse buys can be. When you're out shopping and your children see things they want, explain that they're not on your list and are therefore off-limits. With any luck, they'll get into the habit of sticking to their own lists once they're in charge of their own finances.

In the course of their lives, your kids may encounter multiple opportunities to get their hands on free money, and they should learn to recognize it and jump on it. Whether it’s savings account interest, gains in a stock portfolio, dividends, or a 401(k) match, capitalizing on free money always pays.

ALSO READ: $15,000 Invested in This ETF Could Send Your Kids to College

If you get your kids into the right money habits while they’re young, chances are they’ll uphold those habits as adults. By imparting these lessons, you’ll be doing your children a major service -- one that could set them on a financially secure path for life.

The Motley Fool has a disclosure policy.