One of the best things you can do for your kids is to teach them about
money. As you’re getting your kids ready for college and the future, how
can you make sure they are prepared with a healthy view of money? Here are
nine tips that will help:
- Budgeting Matters
This is the first priority when teaching your kids about money. Creating a
budget is simply making a plan. Your kids will never become wealthy, or
even financially comfortable, without living intentionally. A budget is
simply spending every dollar on paper, on purpose, before the month begins.
When you have this plan on paper, you won’t get distracted by all the shiny
objects promising to make your life better. It is incredibly important to
teach your kids about budgeting, so don’t take this step lightly. - Save, Save, Save
It might not be raining right now, but it will be one day. The savings
account is an umbrella that will keep your kids from getting drenched in
the storm. They might not be making much, if any, money right now, but when
that day comes it’s important they understand why saving matters. The
earlier they develop that habit and begin saving, the wealthier they can
become. That savings might also enable them to make large purchases. Buying
a used car for your kid shouldn’t be only your responsibility, especially
if you can’t afford it. What if they could save several thousand dollars
over a few years to buy their own car? How cool would that be? - Debt is Dumb
One of the biggest myths your kids will face when they enter the real world
is the idea that debt is just a way of life. They’ll hear about the credit
score, “good” debt and debt as a financial tool. The truth is that building
a credit score will cause more harm than good, and using debt as a tool can
show impatience and immaturity in money management. Debt simply makes us
financial victims and limits our future. So talk to them about why avoiding
debt is important. As they become teenagers, they’ll begin to understand
and appreciate this even more. - Beware of Marketing
Marketing is everywhere and your kids are right in the bull’s-eye of most
marketers. Young people comprise a huge demographic that offers tons of
potential profit. Make sure your kids know about marketing tactics like
same-as-cash, zero-percent interest and product positioning. Marketers will
say you need more stuff to make you happy, but that’s simply not true.
Stress to your kid that no amount of stuff will bring contentment. - Shop for Bargains
Shopping for bargains is about more than merely ripping a coupon out of the
paper. A lot of it simply has to do with patience – waiting for the right
time to buy. Help your children learn about when and where to find the best
sales, and they will be able to use that knowledge when they head off on
their own. - Investing Basics
No, your teenagers don’t need to know all the ins and outs of a 401(k), but
they should know the basics of how long-term investing works. For instance,
how awesome is compound interest? The longer you keep an investment, the
more interest you accrue and the more money you make. The older your
children become, the better they’ll grasp investing; so, be sure to pay
attention to their maturity and interest level before you break into
investing. - Insurance … Ugh
Dreaded insurance: not many people love it, but everybody needs it. As much
as we hate paying for insurance every month, sometimes it will save us from
completely going broke when tragedy hits. That’s what it’s for. Talk with
your children about the basics of car, health and life insurance. When your
children get old enough to pay for these on their own, they might feel like
they’re throwing money into the wind. Help them see how insurance is a
major part of a healthy money plan. - Relationships and Money
Guess what? Money problems tend to have a way of creeping into all areas of
your life, especially relationships. When you’re stressed out about money,
you’re not as productive at school or work, and you’re just not as friendly
a person. When you make smart decisions with your money, you tend to have
healthier relationships. - Giving
Every good money plan involves giving. That’s what building wealth is all
about. Ultimately, you’re trying to change your future – as well as the
future of those around you. Don’t simply tell your children they need to
give. Show them. When they see you writing a check to charity, dropping
money in the offering plate or giving your time at a homeless shelter,
they’ll be more likely to follow your lead.
While it may seem overwhelming, you don’t need to bombard your children
with all of these lessons overnight. Take your time. Your goal here is to
make sure they are prepared for how money works in the real world when they
leave home. Prepare them now, while they are still under your roof, and
you’ll build a foundation that will help them succeed for the rest of their
lives.
Copyright, 2015. Used with permission. All rights reserved by author.
Originally appeared in The Old Schoolhouse® Magazine, the family education magazine, 2015 Print Book. Read
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