May 15 Is International Day of Families: 4 Ways to Teach Your Kids About Money
About the author: Lamar Watson, CFP®, is a Fee-Only Financial Advisor in the Washington, D.C. area that works with clients virtually across the country. Lamar's work with his clients focuses on budgeting, employee benefits, paying down debt, buying their first home, and investing. Lamar is the Founder of Dream Financial Planning, a virtual Fiduciary Financial Planning firm specifically designed to help young professionals and minorities take control of their finances and fulfill their dreams. Feel free to schedule a complimentary consultation to learn how we use the DREAM Financial Planning Process ™ to help our clients achieve their goals.
Named the International Day of Families by the United Nations, May 15 is a day dedicated to communities around the globe and the families that make them special. In celebration of this year’s International Day of Families, we’re sharing our top four ways to teach your kids about something that’ll stick with them for the rest of their lives - money. If you haven’t started laying the foundation for healthy money habits with your children yet, now’s the perfect time to start. Here are a few fun, stress-free ways to get every family member involved with finances.
Way #1: Encourage Kids to Experiment
Making mistakes is one of the most effective ways a child can learn to do something. And when it comes to money, you have the power to create a safe environment for your kids to experiment, make mistakes and, with hope, grow their understanding - without costing their financial future.
Give your children a small allowance each week as a tool to teach them the power of saving versus spending. Please encourage them to create a budget and make goals. Soon enough, they’ll learn the value of saving their allowance for a big purchase later instead of spending it impulsively as soon as they get it.
Stay involved with how your kids are spending or saving. Help them talk through their frustrations, answer their questions and provide guidance when needed.
Way #2: Talk About Your Family’s Budget
If your children are a little older and have the basics of money down, consider asking them to get involved in establishing and sticking to your family’s budget. This can be an eye-opening experience for your children, and it’s something you can refer to throughout the month. When your child wants to go out to eat every night, remind them about your budget for entertainment and dining. Every time you’re spending money, your child sees a budget on paper come to life.
Remember, this shouldn’t be stressful for your child. If you don’t feel comfortable sharing your whole household budget, start with just a few easy categories like entertainment, dining out, and groceries. You can even make it a challenge to have your kids find creative ways to do things within the family budget.
Way #3: Make It a Competition
If your household already has some sibling rivalry, why not play into it with a friendly competition?
Turn budgeting and saving money into a game. Give your shopping list to each sibling and let them search online or in the newspaper for coupons and sales. Offer a reward for whoever finds the most savings, or put whatever money is saved from the coupons into their bank account.
If you have older kids, they may be interested in stock market simulation games, which are available online. If you’re not well-versed in the market yourself, this could be a fun activity to do as a family.
Way #4: Emphasize the Importance of Earning
Knowing how to save, invest and spend money is important. But to make the lesson really hit home, consider having your kids earn a little money of their own. Losing money that was handed to them doesn’t make as big an impact as losing money they earned. If they’re old enough to work, consider encouraging them to find a part-time summer job or seasonal gig. If they’re younger, find chores for them to do around your house or for other family members, and pay them per task. The willingness to work hard and be rewarded is one of the best financial lessons you can pass on to your young ones.
In honor of this year’s International Day of Families, celebrate and encourage your children to grow into valuable community members. Finding small, stress-free ways to instill financial life lessons now can pay off later in life. If you’re having trouble finding the right way to talk to your kids about money, ask your financial advisor for assistance. They can help you start the conversation and build the foundation of positive money habits for your kids.
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