Money can be a sticky subject to talk about due to a whole variety of factors. Perhaps households are living under stressful financial circumstances where every dollar needs to be stretched. Or maybe a family has acquired significant wealth which raises a whole host of questions in terms of how much information to share with children. Regardless of the bank account, there are some basic fundamentals that all parents can pass along to their children. Here are some of the most important tips for talking about money with your kids that will prepare them for the future.
Tips for Teaching Kids About Money
Instilling responsible spending and saving habits can start from the time your children are young. Reading children's books about money is an excellent way to lay the foundation for responsible spending from the time they are young. Every single day there is an opportunity to talk about budgets, spending decisions, and savings goals. All of these little lessons can have a big impact on your children's ability to stretch a penny when they have their own financial obligations. Here are some money tips for kids to consider discussing with on a regular basis and as various scenarios arise requiring financial decisions.
1. Show Your Child How to Save When Shopping
Whenever you make a purchase, there is a learning opportunity. If your child is with you at the grocery store, point out the Buy One, Get One Free sales. Also, download the food store app and point out all the digital coupons. If shopping for clothes, start by showing your little one the discount rack in the back where items are significantly reduced. Be sure to point out the difference in price between the retail price of new inventory at the front of the store versus the sale items.
2. Be Transparent About Household Expenses
Share some key information about the fixed expenses that are incurred by your family every month. Rent, mortgage, insurance, utilities, car payments, and cell phone bills are all examples of what to share with your children when they are old enough to understand. In doing so, you are providing them with a fundamental understanding of what it takes to support your family and why you make certain purchase decisions based on your budget.
3. Share Financial Mistakes You've Made
Nobody is perfect when it comes to managing personal budgets. Perhaps there was a time when you made an expensive impulse purchase that you couldn't afford. Or maybe you racked up credit debt by spending more than your income and ended up paying high credit card interest. Lots of people have paid unnecessary bank fees from an overdraft or failing to maintain a minimum balance at one point in time or another. Share the lesson you learned with your child to help them from making the same mistake.
4. Talk About the Importance of Saving for a Rainy Day
Life throws a lot of unexpected curve balls our way. Cars break down, people get sick, roofs leak, jobs are lost, and so forth. When your family experiences one of these events, share with your child the way you prepared financially to deal with it. Talk about the sacrifices you made in order to save for your emergency fund. This type of honest dialogue will stay with your children into adulthood when they will need to responsibly manage their own bank account one day.
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