Setting Your Children Up for Financial Success Pt.1
When I first started crafting this blog I realized that I had way too much to say for it to be one blog post. No one would read it! It was a bit of a rant. Luckily, I had the insight not to publish that monstrosity. So, we’re in for a series.
Teaching good financial habits is really hard. I was trying to build a list of 5 ideas. I ended up with 11… Even at 11, I’m not really scratching the surface, but if you follow these tips you will be well on your way to being a parent that teaches your kids to be money smart and confident. Most parents never address these issues. Most of us were left to fend for ourselves. Just doing these few (or 11) things will put your children way ahead of the curve.
Start young - keep it simple and progress as they age.
You are going to know your children best, and what they are able to handle. Trying these things for the first time can be tough, so also try and give your kids more credit than you think they deserve. You can scale down if they aren’t getting what you are putting out there. My toddlers earn stickers for their chores. My teenager gets paid for specific jobs. My toddlers want to save money for toys. My teenager needs help to balance his checking account, and budgeting. There is a whole spectrum of adaptations as they age. The goal is to start early, and not be afraid of conversations around money.
2. Let your kids see your budget.
First off, I hope that you have one. If you need to create one, message me and I’ll send you a template. If you want help to create your budget (there are many ways to do it, and some will appeal to you more than others) schedule an appointment or message me to sign up for the next budgeting class. Next, share it with your children. For the toddlers, it can be a simple conversation that goes something like. “We have to pay money to live in our house/buy groceries/go to Disneyland. That money comes from Mommy/Daddy working. There isn’t enough money to do all of the things that we want, so we have to be patient and save for some things.” For older kids who can understand numbers and dollars actually show them your budget. Let them see what you earn, spend and what things cost.
3. Stick to Your Budget! If something has to be saved for over time explain it.
Your budget has to be realistic. Do not have a grocery budget that isn’t high enough to feed your family. Every dollar coming in and going out should be accounted for. Have dedicated places in your budget for savings, vacations, debt, etc. There is value in showing your children if you went over budget and why that’s bad. Explain the situation and correct it. Do what you can to be a great example here. Try to minimize the times that you go over. This can be a great time to explain emergency savings. If you also have allocations for every dollar, that demonstrates to your children why some things have to be saved for. This is a great time to talk about credit card debt, and to avoid it at all costs. Teach your children not to buy things they can’t afford. There are so many layers, emotions and obstacles with a budget. It’s ok if you need help with this before you can teach your children to do it.
4. Allow them to help you pay the bills, and see how that affects your account balances.
This one is only for those kiddos who are old enough to understand numbers. It’s pretty sobering for a child to see how much things actually cost. It is also really important for them to develop an understanding of how dollars from earnings get allocated, and why. If you do not have a bill paying process that follow a strict set of rules create one. This is what you want your kids to learn. Teach them to pay their bills in an organized fashion. Show them where your shortfalls are, and how you may have to save money from two paychecks to pay one bill, like the mortgage.
If you have questions or struggles with any of these steps reach out. I am happy to help.