Raising Financially Savvy Kids
One of the greatest gifts you can give to your children is financial knowledge and a sense of responsibility about money. This can be hard to do for a few reasons. One is that money can be an emotionally fraught topic for many people. Another is that you may not have the necessary knowledge yourself. Yet another is that as good as it is to teach this to your kids, it can feel like the opposite because your instinct as a parent is to smooth the way for them as much as possible. Sometimes, teaching money smarts will mean having to say no.
Your Own Money Emotions
The first step is to get past your own anxieties around money and examine any unconscious assumptions you have about the topic. Maybe you always feel panicked about not having enough money because your parents were spendthrifts and sometimes there really wasn’t enough at the end of the month. There are also a lot of unspoken rules around money, such as always checking debt accuracy and not asking people what their income is.
Examining your anxieties about finances is the best way to avoid passing them on to your kids. Try to view it as a neutral topic, and explain it that way to your kids as well. Being financially savvy is important because it makes your life easier, not because there is some kind of moral value attached to it. If you don’t know much about finances yourself, start to learn. There are many articles, podcasts, and books to help you get up to speed.
Think About College
When it comes to kids and money, one big concern is often paying for college, even when they are very young. You can start saving when your kids are born, and once they are teenagers, you can start talking to them about scholarships, grants, and other ways to get funding. In addition, you can take out a low-rate Private Parent Loan to help them out with funding. This can allow them to avoid having to graduate with student loan debt and it’s also probably a better choice for you than dipping into your retirement funds to pay for their education.
Make Age-Appropriate Lessons
Teaching your kids about money can start when they are very young. They can help you cut out coupons, and you can talk about prices in the grocery store. Giving them an allowance and encouraging them to save up for things they want can provide early lessons in delayed gratification. You can also let them participate in low stakes family finance conversations, such as what to do with the entertainment budget. As they get older, you may be able to help them open a bank account. You could even teach kids about investing with a simulator. This could be something you learn about together if it’s a topic you don’t know much about. Talk to them about credit cards and the dangers of compounding interest. You could get a low balance credit card for them so they can start getting accustomed to using one responsibly.