Talking to your kids about money is the best gift you can give them. Knowledge is power. We live in a tech world with so much information at our fingertips. Our kids are on all sorts of devices anyways, why not make what they are reading or looking at informational and useful. There are a ton of finance apps out there but first we need to cover the basics.
How many times have you heard the phrase “if I knew then, what I know now, I’d be rich”?
Talking to your kids about money is the best gift you can give them. Knowledge is power. We live in a tech world with so much information at our fingertips. Our kids are on all sorts of devices anyways, why not make what they are reading or looking at informational and useful. There are a ton of finance apps out there but first we need to cover the basics. Follow these steps for making financial topics fun for your kids.
When to Start?
Honestly the sooner the better. As soon as you can hold a conversation with your child is the best time to start. Now I am not saying you should talk stocks and bonds with a five-year-old but starting with a piggy bank and showing them the value of a dollar and how important saving can be, is a great place to start.
Make it a Family Affair.
As appropriate, include your children in family money matters. Show them how budgeting, saving, and cutting back offers great rewards. Celebrate with them when you’ve paid off a big debt, saved for a big purchase or a family vacation. Including them will not only give them the insight they will need when making financial decisions, but also make them feel included and important.
Focus on Values.
Talking about money should include your views on the best ways to use money. Look for opportunities everyday for teachable moments.
On pay day, talk about how your paycheck is budgeted for housing, food, clothing, savings for college tuition and retirement.
At the store, talk about the difference between “needs” and “wants”, show them examples. Explain the benefits of comparison-shopping sales, coupons and store brands.
When paying bills, explain the many ways bills can be paid: by mail, over the phone, online, etc. Discuss how the funds are withdrawn from your account. Explain overdraft and how important it is to keep your check book balanced and for bills to be paid on time and how that aids in developing a strong credit score. (We will discuss this topic in another newsletter)
Talk about using plastic. Explain the difference between a debit card and credit card. Debit cards act in the same way as a credit card, but the card is directly linked to your checking account and when used the funds are immediately withdrawn from your account and therefore reduces the amount, you’re able to spend within that account. A credit card is a loan that needs to be repaid. You will receive a monthly statement with a new balance and a minimum amount due.
Use Visual Aids.
Show them one or two of your monthly bills. Go through the statements line by line explaining each section along the way. Brainstorm ways to lower the bills, for example, turning off the lights in the room when you leave the room. Or turning off the faucet while brushing your teeth. Show them how little changes can go along way. You can turn it into a game to see how much you can save with a set reward for the family.
Give Them a Chance to Earn.
Whether it’s helping with chores or getting an after-school job, encourage your kids to make money of their own. Once they do, talk to them about spending and saving. Find out what is important to them. Maybe helping at an animal shelter and donating part of their income for a good cause. Any conversation you have with your children will give them a firsthand understanding of how money works and will instill good money habits that will last a lifetime.
Remember to always encourage your children to ask questions about money. If you don’t know the answer you can always research it together.
As your children get older, you can adjust the topics accordingly. There is plenty of information on the internet and many apps to help you and your children get a better understanding of money. Start today by opening an account at your local credit union or bank. Every time they receive a monetary gift or earn some money doing chores or babysitting. Make a special trip to the bank, show them how just saving a small portion of their income can go a long way. You can also download the VENMO app, this is a very popular app used by teens and adults. It is a peer-to-peer payment app that allows for the quick and easy exchange of money directly between individuals. Ask them to talk to you about any apps that they may have heard from and maybe they can educate you.
These are all basic skills that are best learned in childhood. Talk with them, not to them. The best way to get your child to not listen to something you think is important is to lecture them. As a general rule, conversations are much more effective than lectures. If we can succeed in engaging children, and get them to talk to us, the odds are that we’ll be much more effective in getting our point across.
Talking about money can be fun, you just need to be creative.
