How to Talk to Your Kids About Money
Opening up and starting conversations with your kids about how to handle money and finances may seem overwhelming, but it doesn’t have to be. As a parent, it’s your duty to serve as a positive influence in their lives to get them on the right financial track. Here are five things to consider as you embark on helping your children understand the importance of being responsible with their finances.
Start Simply
Start discussing money with even the littlest ones by including them in everyday activities, such as grocery shopping or budgeting. This allows money to become a tangible concept and not some abstract, invisible thing. You can also ask them questions such as “We have $5 to buy a treat; would you pick ice cream or cookies?” These types of conversations help children understand that there are trade-offs to any decision and that money is not infinite.
Be Truthful
Being honest with your kids is a great first step to discussing finances. You can share the family budget for items like groceries or entertainment and remind them of this limit when they ask for items that exceed it.
Additionally, if there are things in your financial past that you’re not proud of, such as going into debt, share them with your kids. Honest moments 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’s 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.)?”
Helping kids visualize what they want for the future is a crucial component of talking to them about money and financial goals. Discussing what they value and hope to have in their future allows them to take a long-term view, which is critical to saving, budgeting, and paying down debts.
Establish Family Goals
Discuss your budgeting methods and set specific goals as a family. For instance, perhaps you set a weekly grocery limit of $150. 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. Involving your children in family finances, however you can, is a great, hands-on way of educating them through 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’re not as knowledgeable about, and that’s okay! Take the opportunity to learn with your kids. Showing your kids that you’re interested in growing your understanding of financial topics will heighten their interest in doing so as well.
Talking to your kids about money may seem daunting if you don’t know how to approach it properly. However, you and your kids will reap many benefits from broaching the subject sooner rather than later. 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. Financial habits are formed young, so it’s critical that you start the conversation today. Use these tips to make your kids feel comfortable talking to you about finances.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. 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.