Thursday, March 16, 2017

How to Talk to Your Kids About Money

When should you begin talking to your kids about money?

Are they are old enough to ask for a toy or a bike? Then they are ready to learn financial lessons that will last a lifetime.

Watch for everyday experiences to build discussions around. Talk about money, read books aloud and play games that center around spending money. Be open and honest when you discuss your financial experiences—good or bad.

Here are a few teachable moments to get you started:

  • Bring your children to the bank with you and show them how transactions work. Ask the manager to explain how the bank operates, how money earns interest and how an ATM works. The manager might even give you a tour—be sure to ask to see the vault.

  • Discuss how you budget your pay for housing, food and clothing. Also, discuss putting a percentage aside for future expenses. An emergency fund, or college tuition and retirement savings account are great examples.

  • Give clear examples of “needs” vs. “wants” using different kinds of foods. Vegetables are a need; candy bars are a want. Explain the benefits of comparison shopping, coupons and store brands.

Chores and allowances
  • Assign chores and give them a monetary value. Discuss ways to budget and divide allowances. Encourage children to set a financial goal, such as saving for a bike, and figure out how to achieve it.

  • Explain the many ways to pay bills: over the phone, paper or by check, or online. Discuss late penalties and how that can affect credit score, plus cost you extra money.

Credit cards
  • Your kids should understand that credit cards are a loan and need to be repaid. Show how your statement comes each month with a bill. Go over the features of different types of cards: ATM, debit and credit cards.

  • It's a part of life now. Tell your children how valuable their personal information and privacy is. Discuss the risks of sharing certain information. Then, as a family, make guidelines for keeping personal information safe online.

  • Include your kids in the planning of vacations. Whether a local outing or a once-in-a-lifetime trip, emphasize the value of saving first rather than paying later. Figure out the cost and discuss ways everyone can help to reach the goal.

Always encourage your children to ask questions about money. If you don’t know the answer, research it together or ask your local banker.