In many families, talking about money can be diﬃcult, and in some cases, almost taboo. Diﬃculties with talking to children about money may include:
Here are a few ideas that may help you start your child oﬀ on the road to being a ﬁnancially responsible adult:
It is never too early to start helping your child develop a healthy respect for money and to help them develop some good ﬁnancial habits. The practice of using an allowance can be worthwhile if it does the right things. If your objective is to teach the basics, consider the following:
This is often the most diﬃcult time for children to deal with ﬁnancial issues. Peer pressure, a desire to have what friends have and the growing realization that they cannot have everything they want and do everything they want, can add tension to any conversation about ﬁnances. It is also the time when children can start understanding more involved ﬁnancial issues and when ﬁnancial habits are formed.
The allowance approach gets more complicated in the teenage years as the costs of items they want goes up and they are doing more things that cost money. Now could be the time to discuss how a job could help them aﬀord the things they want. After-school and summer jobs are an ideal way for young adults to learn that money is earned, and not something that mom or dad will always provide. A job can also teach children about responsibility since their employer will be relying on them to be present and punctual. If an outside job is not possible, consider paying them an hourly rate for more chores and insist they treat it as a job.
Helping the child establish a checking account, or even preparing their own tax return, will go a long way to helping them understand that money is a serious matter and that someday they will need to be self- suﬃcient and make their own ﬁnancial decisions. If they get a checking account, be sure you teach them how it works and that they must reconcile their account every month.
Keep the conversation going
Be open to discussing ﬁnances with your children. Children are naturally curious about what they see their parents doing and you can turn that curiosity into teaching opportunities. The conversations must certainly be age appropriate, but when your child sees you writing checks is an ideal time to start talking about the importance of paying bills and balancing your budget. A question about what it means when the TV news reports what the stock market did can lead to a more serious discussion about money and long-term ﬁnancial goals. And a discussion about choosing a college can be an eye-opening experience when your child learns what it costs.
Take advantage of these opportunities and by the time your child is ready to leave home, they will have a foundation to better prepare themselves for their ﬁnancial future.