As children navigate their teenage years and enter young adulthood, we want to give them every tool they need to succeed as independent adults. We teach them to drive, keep their bodies healthy, be good friends, and develop a strong work ethic. Of course, we dedicate years to ensuring they get the education they need. Every single one of these things is important, but parents often fail to deliver another important life lesson.
Too many of us let our teens and young adults out into the world without the foundational knowledge they need to manage their money. It’s time to address that, and come up with ways to give them the tools they need.
Money Isn’t a Taboo Subject
So many parents today were raised in households where finances, particularly money troubles, were a forbidden subject. The logic was that children should be shielded from the stress of all that. In truth, kids will always feel the impacts of financial issues. Refusing to talk about just adds confusion to the mix.
Talk to your kids about money. Give them age-appropriate information about your bills, savings plans, and financial goals. When they have questions about money, answer them.
Model Your Successes and Mistakes
Once you create a situation in which you can talk about money freely, you can begin setting a good example. This doesn’t mean you have to get things right all of the time.
Sure, it’s great to be able to share what you’ve been able to accomplish by making sound financial decisions. Just know that you can also offer valuable life lessons by being authentic and transparent about the financial mistakes you make. When you discuss money missteps you tell your child that it’s okay to acknowledge their own errors. You also let them see the process of working through the resulting issues.
Healthy Habits to Encourage
There’s never a bad time to develop good money habits. Here are some lessons to focus on with your kids:
Set financial goals
Kids and young adults should set long and short-term financial goals. This allows them to take financial lessons from abstract to reality.
Encourage younger kids to make goals that pay off in the short term. They need a faster reward to keep their attention. Older kids and younger adults are capable of integrating their financial goals into their overall life goals. For example, a college student may have a life goal of financial independence that includes plans to purchase a car, meet a single man, and pay off credit card debt.
Make saving and investing a habit
Help your kids make their money work for them. Otherwise, it simply becomes a slush fund for their immediate desires. Get them to treat every dollar they have with a clear sense of purpose. No, this doesn’t mean recreational spending should be discouraged. In fact, for kids, most spending should be for fun. What you want to discourage is mindless spending.
Track your spending
Have you ever ended the day broke and had no idea where your money went? What about struggling with a lack of money before payday? Most of us have been there. This is a clear example of why tracking your spending is so important. Encourage your kids to track what they spend in a notebook or through a budgeting app.
Deprivation is never helpful
Nobody becomes good at money management through suffering. The idea isn’t to live a life of austerity. Instead, kids should focus on setting goals and deciding how they want to use money to achieve the lifestyle they desire.
Final: It’s Never Too Early or Too Late
You can help your kids learn better money habits no matter how old they are. You can help them, even if you have made recent mistakes of your own. Learning together is valuable. Embrace the topic, and give your children the benefit of money smarts.