Opening up and starting conversations about how to handle money and finances with your kids is often overlooked, but it doesn’t have to be. As a parent, it is your role to serve as a positive influence in their lives to get them on the right financial track and develop a healthy relationship with money. Here are five things to consider as you embark on helping your children understand the importance of being responsible with their finances.
Start Simply, When They Are Young
Start discussing money with even the youngest ones by including by including them in everyday activities, such as grocery shopping or budgeting. This allows money to become a tangible concept and not some abstract thing that they cannot see. You can also ask them questions such as "We have 5 dollars to buy a treat, would you pick ice cream or cookies?". These types of conversations help children to understand that their are trade-offs to any decision, and that money is not infinite.
Being honest with your kids is a great first step to opening the door to discussing finances. You can share the family budget for items like groceries or entertainment, and explain remind them of this limit when they ask for items that don't fit within it.
Additionally, If there are things in your financial past, such as going into debt, that you are not proud of, share that with your kids. Honest moments with your kids are very valuable and will help build trust. Keep in mind that the more open and honest you are with your kids, the more open they will be with you, so being truthful about your own finances is a great place to start.
Talk About Values
Encourage your kids to consider what is important to them for their future. Start by asking questions such as "Do you want to own a house or rent when you grow up? or "What splurges would you like to be able to make when you grow up (travel, cars, etc)?". Down the line it can be helpful to have children involved in charitable donations, to have them identify what they care about, present a case for the donation and stay connected to other needs in the world.
Helping kids to visualize what they want for the future is a crucial component to talking to kids about money and financial goals. Talking about what they value and hope to have in their future allows them to take a long-term view, which is critical to the concepts of saving, budgeting, and paying down debts.
Establish Family Goals
As a family, talk about your budgeting methods and set some goals together. For instance, perhaps you set a weekly grocery limit of $250. Take your children to the store with you when you shop and have them help look for sales or clip coupons to keep your cart under budget. Another idea is to have kids help plan a vacation staying within a budget. Involving your children however you can with the family finances is a great hands-on way to educate them and give them a chance to see real-life examples of how their financial habits will impact them in the future.
Lead By Example
There may be certain financial topics that you are not as knowledgeable about, and that’s okay! Take the opportunity to learn with your kids. Showing your kids that you are interested in growing your understanding of financial topics will heighten their interest in it as well. At Keystone, we are more than glad to include all members of a family in a financial meeting.
Talking to your kids about money may feel hard to start if you don’t know how to approach it properly. However, broaching the subject sooner rather than later will reap many benefits for you and your kids. Ultimately, you want your kids to have the knowledge and skills they need to handle their own finances responsibly as they grow up. As a parent, it’s your job to instill this knowledge in them and to open the door to an often taboo subject so that you can help them get off on the right foot with their finances and have a healthy relationship with money. Financial habits are formed young, so it’s critical that you start early and start the conversation today. Make your kids feel comfortable to talk about finances with you by using these tips.
Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.