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Raising Financially Savvy Kids

May 1, 2018

Is your family’s money mantra, “Easy come, easy go?” Does your family ever talk about saving money or setting financial goals? No matter where your family is on the financial literacy spectrum, it’s important to help your kids learn the value and wise management of money so they grow up to be financially responsible.

The following tips can help you build a base of financial literacy for your kids that will benefit them for a lifetime.

1. Engage in money conversations

While you may not need (or want) to discuss financial issues deeply with your kids, it’s important that you talk about financial basics as a family. For example, let your children know that going into debt has consequences; that you need to work to earn money; and that having a budget allows you to make smart buying choices.

2. Discuss credit card use

With older children, especially teens, discuss the ins and outs of credit cards including interest rates, grace periods, late fees, and why you should avoid making only minimum payments. When it’s time for your older teen to get a credit card, be sure to help them use it responsibly.

3. Be a money role model

Your children are always watching your actions to learn how to manage their own behavior. From what you eat to how much and why you spend money, there is no greater influence on how your kids construct their own patterns of behavior. Keep this in mind as you navigate your finances and be sure to reinforce the “good” money behaviors that you want your children to emulate.

4. Support saving

Teach your children that saving is the key to long-term money management and financial security. Tell your kids about your own savings strategies and how you save for longer-term goals. For young children, you can mandate that they save a portion of the money they receive for gifts and from other sources. When your teen has a job, encourage them to save a portion of their paycheck—you may even want to add an incentive of matching the funds saved.

5. Create earning opportunities

One of the most valuable financial lessons you can help your children learn is that working hard can lead to significant financial rewards. However, many financial experts say that paying children for chores they should perform anyway is ineffective. Experts recommend that children receive an allowance, which is a better tool for practicing financial decisions.

6. Plan for the financial future

During the teen years, it’s important to help your children understand that their efforts and their future careers will affect their income and their financial situation. Start having conversations about how their choices (e.g., credit card debt) in college and their career planning will impact their ability to have the lifestyle and financial future they desire.

Having an ongoing conversation with your children about family finances and good money habits is an imperative part of helping them grow into fiscally responsible adults. You don’t have to make money talks dramatic, just be aware of everyday “teachable moments” that allow you to give your kids tips, like the ones above, and to instill confidence in their ability to handle their current and future financial assets.

Source: May-June Advantage Magazine 2017 Edited. 

Photo by Banjo Emerson Mathew on Unsplash

   

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