Have your financial blunders made you hesitant to speak with your children about money? Well, you aren’t alone.
While you may feel some reluctance around the topic, consider this: personal experience can teach your children about financial consequence and success.
Some Canadian children (in Ontario, for instance) are learning financial literacy in school. Whether children receive this knowledge in the classroom or not, parents should feel empowered to play their part at home as role models. You’ll be the one who’s consistently there to support your child’s financial literacy over the years, and you can provide practice in financial decision-making at home.
Not sure which financial lessons are most important? Here are four to consider as you guide your children through their financial journeys:
1. Earning Money
One of the first experiences your child will have financial matters is earning money. Whether you are offering your child a small allowance for jobs around the home, or your teen has a part-time job after school, earning money through their own efforts helps children identify the value in hard work.
2. The Importance of Budgeting
Discuss creating budgets with your children so they can make the most of their earnings. Some parents require the income a child or teen earns to be used for discretionary spending – things like gas, going out with friends or buying a new toy or clothing item. Be sure to help your child create a system where a portion of his or her money will go into savings, an emergency fund, a car or phone payment, etc.
3. Saving Money
As young adults plan to move away from the family home, many are unprepared for the shock of monthly bills and contractual obligations. By having a firm grasp on saving money and budgeting ahead of time, your young adult can bypass the anxiety and confusion of “bill shock” when he or she moves out. You can teach younger children about saving money through the use of a piggy bank, and older children through opening a savings accounts and setting financial goals.
4. Needs vs. Wants
Because we live in a want-driven society, this is a crucial discussion to have with your children early on. Teach your children that “needs” should be built into their budgets, and a “splurge” or extra money fund should pay for the “wants” in life. This can also segue into a broader discussion of why your child or teen wants something. There are many valuable conversations – beyond finances – that can come from this topic and benefit your children for years to come.
Now that you’re equipped with these key lessons, start having regular discussions about finances with your children so they can build a positive relationship with money. And remember, you don’t have to be a financial genius to teach them valuable lessons.
If you have a tween or teen, rather than feeling like you’ve missed a step, know that it’s never too late to start. For more information on how to teach financial literacy to tweens, click here, and for teens, click here. Each resource offers concepts and tasks that will help them develop the financial skills they need as they prepare for adulthood.
If you would like more personalized financial guidance as you educate your children about money, please contact us for a complimentary consultation.