Finances and the Family


By FamilyTime

It's never too early to start teaching your kids about money

 

It can be tough to talk about money with our kids. Heck, it’s hard enough to discuss it with another adult, but “pretending” family finances are not important is a good way to get into fiscal difficulty.

Excluding the kids from some of the discussions means they won’t learn how to handle money as well as they might. If you believe a financial education is as important as an academic one (and it is), then it’s time to include the children in conversations about money.

Money In and Money Out

While your children don’t need to know exactly what the household income is, they should understand the connection between your jobs and expenses. With regular (but brief) meetings, help them comprehend that the money in your paychecks goes to pay for things such as rent or a mortgage, health care, food, and clothes. These meetings could be weekly or monthly, but they should be consistent.

Young kids are not ready to grasp the ins and outs of insurance, nor do they necessarily need to know about car loans, second mortgages, and credit card debt. And yet they are capable of understanding that without money coming in, none can go out.

Without money to go out, no food, no toys, no Internet, no vacations.

Talk about Values

A good way to approach discussions about money is to ask the kids to identify values. What’s important to the family? How should money be allocated?

This should go beyond the basics (the mortgage and taxes). Instead, delve into what you and the children, as a family, believe to be most important.

You and the kids might want to go on a vacation or spend more time on family outings or activities. On the other hand, it might be important to buy a larger car for sports equipment and camping trips.

Your kids might feel a percentage of the family income should go towards helping others.

Decide how much money you need to save to accomplish one (or more) of these goals. Set up a bank account, buy a piggy bank, or keep an online record of the money you put aside weekly or monthly to meet the objective. The kids should be privy to this money and accounting.

Keep It Simple

As critical as it is that your children understand the role of money in their daily lives and the life of the family, don’t overwhelm them. They should not lie awake at night worrying about bills and debt!

Pick and choose what you will discuss with your offspring, and what is off limits. And of course, as your children grow up, you can include them in more conversations. Depending on your family’s situation and philosophy, when they are teens, they might begin to contribute to the family coffers.

For more on how and when to discuss money with your kids go to moneyasyougrow, an interactive site created by the White House.