Inside: Family Finances – How To Make Your Child Part Of The Conversation. Collaborative post.
The best time to talk to your kids about money is the present. They are going to learn about money from the wider culture, so it’s best if you can give your personal input. It’s better that they learn from you than from TV and celebrity culture.
Money doesn’t have to be a taboo topic. Find the courage to have this difficult conversation with your children. Your family budget affects everyone. Involving your children in budgeting will make them feel included and provide invaluable education.
Start When They Are Young
Helping children to learn about money management can take a lot of patience. However, teaching them financial literacy early on will stand them in good stead for the rest of their life. Later on they will be able to deal with planning budgets, setting limits, and not buying impulsively.
As soon as your child has basic math skills, you can start talking to them about money. You don’t need to give a long lecture. You can simply offer age-appropriate answers to questions. You could let your child hand over money to the cashier and receive change. You could explain the value of different coins and notes.
Talk About Values
Any conversations about money should include talking about your values as a family. How does your family feel about spending and saving? You can impart some knowledge about why saving is important. Let them use a piggy bank, so they get an idea of how money builds over time. Tell them that big expenses, like going to college or buying a car, require planned saving.
Talk to them about the importance of living within your means and not getting into debt. If you offer some of your wages to a charity, tell your children why this is important to you.
Model Positive Behaviors
Children learn from talking, but they learn a lot from observing. It is important that you model positive behaviors around money. This could include writing out a budget before you go shopping and sticking to it. The children could help you with this, and you can explain the price of each item and how it will fit within the budget as you put it in your shopping trolley.
Be open about what you are saving up for. Show your children that many things can be fixed instead of always buying a new item. Make sure you don’t use shopping as a form of therapy or to give yourself a short high.
Set Goals As A Family
You can let your children sit in on meetings where you all talk about money and budgeting. The final decisions will obviously rest with you, but you can allow your kids to have active input. If you are getting out of debt or have a savings target, you can celebrate as a family as you hit your goals.
Talking about goals together is an opportunity to explain money management. If the family needs a new car, you may have to sacrifice some holidays. Talking about this as a family will help your children to understand.
Let Them Earn Money
Giving your children financial compensation for completing simple household chores will teach them the value of money. They could vacuum the house or do the dishes. They could even get a small after-school job. This will teach them a lot more than simply giving them an allowance. You could even let them open their own bank account. There is a list of prepaid cards for kids to choose from.
You can talk to them about how they want to spend their money. This can include immediate rewards such as buying an ice cream, as well as longer-term goals, such as buying a new video game. You could also encourage them to give a small amount of money to a charity. This will be an opportunity to discuss a cause that they feel is important.
Learn About Money As A Family
There may be some financial topics that even you don’t understand. Your older child might ask you about Roth IRAs or mutual funds. If you don’t fully grasp these topics, this could be a wonderful opportunity to do some research together as a family.
You don’t need to have all the answers. Admitting that you don’t know gives an opportunity for everyone to learn together. It’s even possible that your own children could teach you something about the emerging world of digital currencies or other such topics.
Make It Visual
Children can be assisted in the learning process with visual aids. Conversation alone can seem abstract. Consider showing them your actual bills. Explain where the cost comes from. This could give you a chance to talk about how to lower the bills. You can explain that switching off lights and devices when they aren’t being used will save electricity.
You can then review the next bill and see if you made any savings. You could give your children a treat if the bill is visibly smaller. This can be turned into a game with tangible targets and rewards.
Let Them Make Their Own Mistakes
As you teach your children about money, you also need to accept that they will make their own mistakes. Give them a bit of room to test out behaviors around money management. This kind of firsthand experience can be the best way to learn.
Sensible money management can take some trial and error. Be patient. If your child makes a costly mistake, simply sit and talk to them about other possible behaviors and outcomes. Make them see that they always have a choice when it comes to how they use their money.
In Summary
In this article, we outlined some ways that you can really involve your children when it comes to family finances. As our children learn and develop, we can use this time to give them vital financial skills. Any time and effort that we choose to invest now will pay dividends in the future.
Having a good understanding of how to manage money, stay out of debt, and save, is absolutely vital for all of us. Teaching values around money to your children can also help you to reinforce your own positive behaviors.