Have you talked to your kids about money? It’s crucial to start these discussions early — especially when you remember that only one in three Americans is financially literate. This way, you can prepare them for their futures. There’s no denying that money isn’t an easy topic to cover. Still, it’s vital to do so. Here are six ideas to try.
Set an Appropriate Example
There are endless situations where your children look to you for guidance. Therefore, you need to set an example. If you don’t manage your money correctly, your kids will likely develop those habits. For instance, you may use your credit card more than you should. That’s a common struggle, but you won’t do your children any favors if you lead them to believe that credit card debt isn’t an issue.
Try to make responsible choices when your kids see you make a purchase. You can even explain your actions to them so that they further understand. The same idea applies to instances where you save or give cash. They’ll remember those moments forever, so you need to set an appropriate standard.
Discuss Earning, Giving and Saving
There are three components to finances alongside spending. You’re able to earn, give and save, too. It’s smart to broach every way that your kids can use their money so that they know their options. Plus, you don’t want your children to think that they can only buy things. You should discuss wages, philanthropy and interest as other topics. Try to use real-world situations to demonstrate.
It’s important to tailor your approach to your children’s ages. A 3-year-old can grasp concepts related to money. That said, you won’t be able to use specific words and actions. A piggy bank with three sections for saving, giving and spending works well. You could also help them earn cash through different methods, like chores.
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Try Commissions Over Allowances
You’re not alone if you don’t want to give your children an allowance. They can promote important lifelong habits, but your kids may learn to expect money every week rather than earn their dues. That’s why a commission can be a helpful alternative. Your children only earn cash when they complete a chore. That allows them to have a more realistic attitude about money. They can’t wait for funds to show up in their bank accounts.
There are a few ways that you can approach a commission. You could set a standard fee for each task, such as $1 per job. You may want to use a schedule to list out each chore for every kid. Then, you can pay them weekly or biweekly to mimic a real paycheck. Either way, you’ll be able to teach them a valuable concept.
Develop Budgets as a Family
It’s important to chat about money as a family. You shouldn’t feel like finances are hard to discuss. It’s true that money can lead to stress and worry, but you can avoid those emotions if you create room for open dialogues as a family. There are some subjects that you’ll want to leave for your partner. That said, you should try simpler topics like budgets with everyone present. This approach makes money comfortable.
As a result, your kids are less likely to view finances as conversations to avoid. You can cover groceries, sports, vacations and other areas that you tend to leave cash for every month or year. Have your discussions during dinner so that everyone will be present.
Introduce Various Consequences
There are consequences that you need to teach your children. What happens when you don’t make your mortgage payments? This topic helps your kids further grasp that finance has various layers. They’ll eventually need to borrow money for different reasons, so it’s best to start early. A lesson that covers fees, penalties and credit scores will be extremely beneficial for them.
Use Real-World Situations
This approach often falls under examples, but it’s a more concerted effort. You’ll specifically create situations to teach your children. Let’s say that your kid sees a toy that they want to buy. You could tell them how much money they need. That said, it’s far better to actually show them. You can take the cash from your wallet and put it in their hands to count. They should be the ones to interact with the cashier, too. A teachable scenario will always be more effective than words. If you can guide your children through purchases, you’ll be able to instill specific lessons.
It’s true that finance can be a difficult concept to grasp for both kids and adults. That said, you can shape your children’s future habits if you take time to discuss cash and its many possibilities. As a result, your kids should grow up to be wise savers and spenders.
Jennifer Landis is the founder of Mindfulness Mama, a blog where she talks all things #momlife, marriage, mindfulness, and everything in between. A thirty-something mom of two, Jennifer spends her limited free time practicing yoga and pilates, sipping tea, and reading with her littles. You can find more from Jennifer on Twitter, @JenniferELandis.