Growing up, money was seldom discussed in my household. I vividly remember asking my father about his salary when I was just seven, only to be met with a sharp rebuke that such inquiries were considered impolite. After my parents’ divorce during my teenage years, I quickly landed a job, eager to earn my own money and spend it as I pleased. This created a sense of pressure to work relentlessly, and even now, I grapple with those feelings. As a parent, I’m determined to ensure my children develop a healthy understanding of finances.
Teaching kids about the value of money is essential, but equally important is creating an environment where discussing finances feels safe and natural. If I merely lecture them about money, they won’t be inclined to engage or ask questions. Research from Next Gen Personal Finance indicates that only about one in six high school students in the U.S. is required to take a standalone personal finance course, leaving parents with the primary responsibility to impart these vital lessons.
Brad Klontz, a financial psychologist and author, notes that many individuals struggle with “money disorders,” often stemming from deeper psychological issues like anxiety or past trauma. This underscores the urgency of instilling good financial habits in our children from an early age.
Tim Sheehan, CEO and co-founder of Greenlight, a kid-friendly financial management app, emphasizes that the current environment, with more time spent at home, is perfect for initiating conversations about money. Many families are reassessing their budgets due to job losses and other economic challenges, making discussions about financial priorities more relevant than ever.
I have always maintained an open dialogue about money with my teens, striving to eliminate any stigma surrounding financial discussions. However, I’ve realized that this needs to be a continuous conversation, especially now as we navigate these turbulent times. If you’re unsure where to begin, Sheehan suggests discussing the difference between wants and needs—a particularly timely topic as many of us face reduced incomes or unemployment.
It’s also crucial to educate kids about credit card debt. Recently, I discovered my children believed credit cards were just free money. They were unaware that payment plus interest was required each month. With my eldest soon to receive credit card offers, I want to equip him with the knowledge to make informed decisions about credit.
The average household credit card debt in the U.S. stands at $5,331. To combat this, Sheehan suggests introducing kids to debit cards early on, allowing them to manage their own finances responsibly.
Learning about money doesn’t have to be tedious. You can make it engaging by incorporating games. For example, have them calculate tips for delivery or figure sales tax. A classic game of Monopoly can also instill financial principles in a fun way.
Rachel Cruz, a personal finance expert, advocates for consistent discussions about three core principles: giving, saving, and spending. Teaching children to donate is particularly impactful, instilling a sense of empathy and social responsibility. It’s also vital that they learn to save and spend wisely, understanding that once their money is gone, it’s gone.
Jim Taylor, a finance veteran, advises against giving children money freely for unnecessary items. Instead, he provides a weekly allowance and teaches them budgeting and investing by visiting the bank together. He suggests involving kids in the budgeting process, such as setting a budget for gifts when invited to parties.
Teaching kids about money is challenging; I find myself navigating situations where my daughter wants me to order something online but doesn’t offer enough cash to cover the total cost. Or when my son forgets to reimburse me for his car insurance premium. It’s essential to impart lessons about the real-world consequences of financial decisions, including the importance of meeting obligations on time.
Starting these conversations early can pave the way for your children to be comfortable managing their finances as adults. Why wait? Now is the ideal time to engage in discussions about money while we’re all together at home.
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In summary, fostering an open dialogue about money with our children is crucial for their future financial well-being. By discussing budgeting, savings, and spending, we can help them build a solid foundation for managing their finances responsibly when they eventually step into adulthood.
Keyphrase: Talking to Kids About Money
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