Communication is one of the most important tools in any relationship. Whether it be your spouse, children, friends, or coworkers, good communication can go a long way to establishing trust, honesty, and openness, strengthening your relationships.
But communication isn’t always easy, especially where finances are concerned. So many people are uncomfortable talking about money with their peers, so imagine how they must feel when thinking about talking about money with their kids!
Even though you may experience a few growing pains, talking about money with your kids is an important step to their development. It allows them to improve their own relationship with money and approach the topic in a healthy way.
But where do you start?
Below, I have detailed four important financial topics to discuss with your children. You will find that these conversations will help you grow closer as a family while also deepening your children’s knowledge about the role finances play in their lives.
Budgets: What They Are And Why They Matter
When you talk with your children about money, one of the first things you can talk about it a budget. Explain to them that a budget is a tool to help track your spending. This conversation is a great way to show them that the things you do to run your household cost money: school, sports, ice cream, the house, etc.
Teaching your kids the value of budgeting will also help them become aware of how money operates for your family. You can even share the family budget with them to make them apart of the experience, showing them how to track expenses and why it is important.
Budgets help you remain financially responsible and alert of your payments each month. It helps you prioritize your spending and is a wonderful teaching tool to introduce your kids to spending and saving, intentionally.
You can show them that by spending money on their swim lessons, you are prioritizing their health, teaching them a new skill, giving them the opportunity to meet friends, and spending time together. Showing them that money is related to your own values and priorities will only help them establish their own.
The Ins and Outs of Saving
Why is it important to talk to your kids about saving? Saving is a great way to help them understand the difference between long-term needs and short-term desires. For example, they may really want to get an expensive new outfit for a concert, but that money could be used to add to their college fund this month.
When you save, you have the mindset that it is good to work hard for the things and experiences that you want. You have to save for the family vacation to Florida, so you won’t go out to eat as much this month, as another example.
Talking about saving will help your kids develop a safe, practical, and forward-thinking approach to their finances.
At some point, you may provide your kids with a credit card. No matter what the card is for, it is important to talk with your kids about credit in general and what the card is really for. Credit is a misunderstood thing for many people, which lands them knee-deep in credit card debt. Teaching your kids about credit and the proper ways to use it will help both you and them in the long-run.
You can tell them that credit cards are not just free money and that you should only charge what you know you can pay off at the end of each month to avoid going into debt. This will help teach your kids responsibility and financial awareness.
Create Family Financial Goals
As a financial planner, I talk about goals all the time. Here at Wealth Habits, we prioritize your goals to help you find the success you are looking for. As a parent, teaching your kids about financial goals can help them see the bigger picture and give them something to work towards.
Let your kids be involved in any way that you feel is appropriate in your financial conversations. This will show them what you as a family are working towards whether that is paying down debt, contributing to a college fund, or looking to move into a bigger house. Keeping your children involved is the best way to lead by example and teach them the value of taking care of their finances.
Talking about money isn’t always easy, especially with your children. But communicating with them about finances will only help them develop healthy relationships towards money and instill good habits that will lead them to financial success in the future.
We love helping families reach their goals. Do you have a question about the next steps for your finances? Schedule a call and we would love to speak with you.