According to a new study from financial firm, T Row Price, parents would rather talk to their kids about drugs than money. In the study, seven percent of parents surveyed admitted that having the drug talk was tough, however 20 percent of parents surveyed said that they struggled even more when it came to talking to their kids about finances. Well, fear not, fellow parents, there is a way out of this fiscal navigational nightmare. While I was bringing up my children, money was just as open a topic as any other topic was. And from my 18-years of trial and error, I have a few tips and tricks on how to talk to your kids about the dreaded subject of money, and teach them how to use it too.
No. 1: Involve Your Kids in the Budget
When my daughters turned 10, they became an integral part of the family budget. Every member of the household receives a copy (via email) of the budget each month. This gave everyone in the house a clear picture on what was coming in, what was going out and exactly what was left over at the end of each month. My kids know the importance of having a budget, but also the importance of talking about money openly.
No. 2: Teach Your Kids to Be Money Wise
I used back to school shopping as a tool to teach my children how to be money wise. We would draft a budget for their back to school needs, then, I would give them the cash and let them select the items on their list, based on price. They learned (through trial and error) how to stick to a budget, and what happens when you go over budget.
No. 3: Teaching Your Children How to Use Credit Responsibly
To teach my kids how to use credit, I opened up a card with a $300 limit. I added them as authorized users, allowing them to ‘rent’ my excellent credit so that they would have a backbone of established credit when they turned 18. Since the limit on the card was only $300, they were not in danger of overspending too badly, but it was their responsibility to pay me their portion of the credit card. Every month, 10 days before the cards due date, I would invoice them. They gave me the cash and I paid the bill. If they were late, they paid the bill with interest. The more responsible they were, the more their credit line increased. Now, at 18, they have two established lines of credit that they know how to use responsibly.
No. 4: Quit Hiding Money Problems
I understand that most parents do not want to burden their kids with money troubles. However, when you make kids part of your budget, they already know when things are tight. Have a conversation with them about it; you would be surprised at how much kids can comprehend and be ‘okay’ with, if you are just up front about it. Whenever I said, “No, I’m sorry, it’s not in the budget,” my kids understood. After all, they could see it for themselves.
Financial honesty just makes life easier.
What tricks have you come up with to talk to your kids about money?
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