To start teaching kids about money begin doing this as often as possible.
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All parents want their kids to learn about money, right?
When asked, what parent is going to say: “Naw…my kids are better off not understanding money.”
But just because we want to teach our kids about money doesn’t mean we know how.
And guess what? There’s an incredibly easy way for parents to begin teaching kids about money. It doesn’t matter how much money you have, what your history with money is or if you know the first thing about the stock market.
Here’s the Secret
Sometimes it feels no matter how hard we try, teaching our kids certain life skills is an uphill battle – like how to compromise with a sibling, keep bedrooms clean or take on some semblance of time management.
But research shows that when it comes to teaching kids about money, parents really can make a difference. According to a survey by H&R Block, 75% of teens say their parents are their most important source of financial information.
And where does this information primarily come from? Discussions. So the more we talk to our kids about money, the more our kids will learn and be well-equipped to handle finances on their own when they become adults.
But how do we start? And what needs to be discussed?
Twelve Talking Points
In her book, “Smart Mom, Rich Mom”, author Kimberly Palmer outlines a dozen conversations parents can have with their kids about money. Some of these conversations will need to wait until the teen years, while others can be discussed with kids as soon as they’re aware of the concept of shopping and money.
Tell kids about the mistakes you’ve made with money:
Admitting our mistakes to our kids isn’t always easy – but as Palmer points out: “Young kids love to hear about the mistakes you’ve made. It not only makes you seem a bit less infallible, but it lets them know that it’s OK to make mistakes if even their parents aren’t perfect.” Examples she includes are waiting too long to begin saving for retirement, getting into credit card debt or wasting money on something you didn’t really need.
Explain to kids how you earn money (and use it to pay for family expenses):
In our digital world, money has become virtual. Kids often don’t see us deposit a check or sit down to write out bills. Explaining how parents work hard to obtain money that pays for necessities, like a home, car, and food, will help kids make the connection.
Teach kids how to be a media critic:
Kids don’t have the ability to view ads critically. It’s up to parents to shield them from advertisements when they’re young and teach them how to be skeptical as they get older.
Teach kids Econ 101 (Even if you don’t know the first thing about economics):
Basic concepts like supply and demand or needs vs. wants are important concepts for kids and adults to grasp. If economics was never your cup of tea, your kids can still learn basic concepts through books like “How Ella Grew an Electic Guitar” by Orly Sade and “The Short Seller” by Elissa Weissman.
Help kids learn how to plan for big goals:
If kids express a desire for a big purchase, whether it’s a bike or going to college, talk to them about how to achieve the goal – including the trade-offs and delayed gratification involved.
Practice generosity and gratitude as a family:
As Palmer says, this practice “is to take a break from wanting and to appreciate what we do have, which cultivates a feeling of richness in itself and also gives an opportunity to consider how we might be able to help others who are not as fortunate.”
Teach kids how to be frugal:
When shopping with kids, explain to them why you’re willing to spend $7 on a set of markers but not $20. Kids will begin to pick up on where you draw the line between what’s a reasonable amount to spend and what’s extravagant.
Teach kids privacy protection online:
Online protection is important for kids to understand whether it’s related to finances or not. Include a discussion about not sharing a social security number, birth date or other identifying information when kids first start to go online.
Inform teens that there are financial tools that protect them from unfortunate events:
Talking about insurance and wills is a boring topic even for adults, but it’s important for parents to make teens aware that they’ll want protections in place – like renter’s insurance and health insurance – when they’re in their twenties.
Show kids how to use a credit card and bank account:
While how to use these tools is obvious to parents, they aren’t straightforward to twenty-somethings who are just starting out. Walking kids through the steps needed to use an ATM and explaining why it’s important to pay off credit card debt in full each month will serve children well.
Show kids how to be assertive (with companies and bosses):
Let kids see you asking a company for a refund or to demand better service because your kids may need to do the same one day. Also, once they are old enough for their first real job, encourage and coach adult children how to negotiate the pay they deserve.
Discuss retirement and investment concepts:
Getting teens familiar with the concept of saving for retirement (and terms like 401K and Roth IRA) can help them get ready to open up their first retirement accounts when they land their first job.You May Also Like: