Teaching Your Kids About Money

Published on May 14th, 2014

It is important for your kids to have realistic ideas and expectations when it comes to money. They learn from you, so you should be teaching them how to save and spend money wisely. Follow these five tips for teaching your children financial responsibility:

Understand that your kids get stressed about money, too. High school and college students are concerned about finding a viable career to support themselves in the future, as well as paying off student loans. Ask questions about what your kids are thinking about when it comes to money and the future. Don’t just bring it up once; make it an ongoing conversation.

Explain that online shopping requires real money. With new technology being introduced regularly, younger generations are used to doing things on the Internet, including shopping and banking. This means they rarely see physical money change hands, making it hard to understand that the money they are spending is real. Take your son or daughter to the bank and explain how deposits, withdrawals and other banking practices work.

Don’t lie about money. If your child asks you how much money you make, be honest. Lying about money will teach your kids to lie about money themselves. Rather than saying “we can’t afford that” when you simply don’t want to buy something, tell the truth. If a question is asked about money that makes you uncomfortable, then tell the child you don’t want to talk about it. Lying settles issues in the short-term, but has long-term negative implications.

Don’t avoid money conversations. It may not seem like it, but eventually your kids will be adults and out on their own in the real world, and it is your job to make sure they are prepared. Tell them mistakes you made with money when you were young and how you solved the problem. Bringing it up regularly will make it a normal conversation in the home, and will allow your kids to be open with you about their own financial concerns.

Teach kids about investing! Explain how investing works and how it can pay off in the long run. Many people under age 35 are too conservative when it comes to retirement accounts and other funds because they aren’t sure how they work. Help your children understand the power of investing and it can better their – and your – future.


Courtesy of Forbes

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