Teaching Your Kids About Financial Responsibility

When was the last time you talked about the household budget with your kids? If you’re like most parents with young children, the answer is probably never. Nearly 70 percent of parents in the US don’t talk about money with their kids. This stance could be hurting the adults of tomorrow more than you realize. Schools aren’t teaching them about money and neither are their peers. The only place they can learn about financial responsibility is at home.
Money’s never an easy conversation to have, and it only gets harder when you have it with your kids. If you feel out of your depth broaching this subject on your own, turn to this guide for some pointers.

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Step number one: get over it

Money is a topic of conversation that falls out of most people’s comfort zones for many reasons. For some, they may feel like they don’t know enough about the subject to talk about it with their kids. For others, it could be their own bad finances that are stopping them from taking the plunge. Feelings of shame over a bad credit rating or massive debt are an effective muzzle.

Chances are you’re either uninformed or dealing with bad finances because no one told you how to run a household budget when you were their age. Think back to when you first went out on your own; was there anything you wished someone had told you about paying bills, looking for payday loans, signing a mortgage, or preparing your taxes? These are things you should be talking about with your kids.

It doesn’t matter if you don’t have a degree in economics to help explain why markets work the way they do. The most basic information is the most useful when it comes to personal finances. Get out of your comfort zone and talk about them with your kids. If you aren’t sure about anything, take it as an opportunity to learn alongside your kids.

Take it slow

You might want to get the conversation over with as quickly as possible, but you don’t have to share all your wisdom in one exhaustive sitting. They don’t need to know everything there is to know about personal finances all at once, nor could they retain it all even if they did. This should be a conversation you have throughout their lives, updating it as their needs change. You’ll want to focus on the basics like saving and budget with young children, but you can branch out to talk about student loans, credit cards, and mutual funds once they’re in high school.

Involve them in household tasks

Agency is a wonderful teaching tool that forces your kids to apply the lessons they’ve learned into everyday life. You can use practical examples to help them get used to spending money, like following a budget when you’re grocery shopping. Get them to help make a grocery list before you pick up food for the week. Not on will it help them gain organizational skills, but it will also show them how much money everyday objects costs.
If you give your kids allowance, have them make a budget. Their budget doesn’t have to be perfect or even anything that resembles your own household budget. What’s important is they start thinking about how they spend their money and how saving can help them achieve goals, like buying something expensive.

Don’t hide away

If you have embarrassing things in your financial plans, you may feel like you need to hide them from your kids. Though you aren’t proud of debt or bad investments, there’s a silver lining to these blemishes. Your financial difficulties can be a lesson for your children. If you’ve had to rely on personal loans before, talk to them about why you needed them. Discuss when it’s appropriate to get access to short term loans and how they differ from other kinds of cash advances. If you’re working to improve your poor credit rating, explain to them why your rating is so low, so they can avoid making the same mistakes. Did you get audited by the IRS for having filed your taxes wrong? If they’re old enough, talk about why you made these mistakes and show them resources that can help them file their taxes correctly.

Conventional wisdom files money alongside sex, politics, and religion as one of those topics you shouldn’t talk about, but sometimes, old-fashioned rules need to be broken. In case of your children’s financial health, this is definitely one of those times. Make an effort to talk about personal finances with your children. When you include them in your own finances, you can raise children to be financially responsible adults.

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