When we, as parents, are struggling financially it can be difficult to want to have a conversation with our kids about money and finances. But, as you well know, kids are watching and can see our ups and downs. Sharing with them the many different aspects of budgeting, family finances, and paying bills on time will help set the foundation for a better outlook for their finances. And, it doesn’t have to be an elaborate conversation. Provide bits of information at a time, show kids how to pay a bill, and guide them through creating a budget with the money that they have. To help you get the conversation started, here are some tips on how to talk to your kids about money.
From those early toddler years of “can I have a penny?” you should be talking about money. Make the conversations age appropriate, but don’t wait to start the conversation. And pick up a piggy bank so that even your toddler can understand that money has a place where we keep it safe. As your child grows then you can add to the conversation with complex topics like saving for college or buying a home.
Allowance & Budget
By offering your children an allowance for chores that you consider to be “above and beyond” you’re teaching them how to work for their money. But, don’t stop once the allowance is then paid. Teach them how to budget the allowance they’re receiving. How much will they save, how much can they spend on something they want, and how much do they give to a charity or a good cause? By breaking up their only income of allowance, you’ll offer a variety of lessons about good money management, working for their money, patience to save for what they want, and doing good for others.
Create Long-Term Savings Goals
Daydream with your child about something they want, but is a little more out of reach than one day’s allowance earnings. Once they have decided on something they want, help them save to buy that item and allow them the opportunity to earn more money from you to save for the item over a specific period of time. And, should it come up that your child wants to spend their savings for something else, simply because they do not want to wait, encourage them to stick with their goals and see the big picture. They’ll certainly be happy once they have bought what they’re working so hard to save for.
Borrowing money is part of everyday budgets. Ensure that your children understand why the house has a mortgage, and how you’re paying this money back over time. Teach your children about borrowing responsibly, paying back on time, and the penalties for being late on a promised payment.
Talk About Work
Provide your kids with a clear example of how to earn money… “Mommy goes to work and for being at work I paid a wage. Every two weeks my company gives me a check for all the time I spent at work.” Now, what do you do with that check? This may seem painfully obvious to us, but for our kids going to work may just be something that parents do and they don’t fully understand the concept. Engaging in this type of conversation also reinforces the previously discussed allowance and teaching your children to earn their own money, too.
Teach Bill Pay & Credit Card Use
Years ago our parents taught us how to write a check. While that is a largely outdated practice now you can show your children how you schedule a bill payment through your bank or make a payment online directly by visiting a company website. Plus, what do you do when you go to pay for your groceries? Teach them how that plastic card you swipe is linked directly to your bank account and how to use it at the store.