How much should you share with your kids about your finances?
Posted by Century Support Services on Oct 10, 2022
Children are notoriously curious. And as most parents find out at inopportune times, giving age-appropriate, honest answers to a question about an adult issue can be tricky. This is especially difficult if the child’s question exhibits a healthy inquisitiveness – something to be encouraged, not repressed. You want to avoid shutting down a child’s healthy curiosity because you are either ill-prepared or uncomfortable talking about it yourself.
So, when the questions about money and finances pop up and, rest assured, they will, it is best to be prepared. Seize the moment as teachable, one you can use to help prepare your kids to be self-sufficient, successful adults.
Why is it Important to Talk to Kids About Finances?
Having ongoing, honest conversations about finances with curious children will help them approach adult financial issues with openness, knowledge, and a willingness to ask for help when needed. Parents should recognize that children may not be old enough (or have the necessary life experience) to understand certain financial concepts.
Children learn best from a positive experience with a trusted adult rather than an ad hyped on TV.
A recent OnePoll survey of parents with kids aged eight to fourteen revealed that more than eight out of 10 would have preferred if their parents helped them learn about finances while growing up. About 13% of the respondents noted they had no financial education as kids.
Consider these suggestions when deciding how to talk finances with your children. But don’t be surprised when they know more than you think.
Answer the Question at an Age-Appropriate Level
A confusing answer has no educational value. And a response that causes discomfort may cause unnecessary distress, which is counterproductive to the original goal of teaching the child about finances.
Share age-appropriate past decisions that resulted in an unfavorable outcome. Explain to them how you wish, in hindsight, that you had considered a more well-thought-out choice. In addition to teaching children how to avoid rookie financial mistakes, your honesty (and willingness to be open) will help build a stronger relationship that can last a lifetime.
Talk Financial Concepts, Not Exact Figures
Teaching children about money and finances is not about disclosing personal financial details. Talking to kids about money and finances is a way to introduce important concepts (i.e., budgeting savings, paying down outstanding debt, and charitable giving). These concepts provide the essential life skills children need to navigate the world towards their personal and career goals.
There are various apps (some offered at no cost) to introduce a real-world budget while teaching them to use it if they are old enough to understand. As they become adults, this simple gesture provides a financial jump-start to keep them ahead of the curve as they enter college.
A Solid Financial Foundation is Among the Best Gifts You Can Give a Child
Perhaps the best lesson that can be imparted to a young mind is that the difference between a goal and a dream is that a plan defines a goal, and a dream exists without an actionable plan.
And to reach financial goals, one must have a plan, which typically requires short-term sacrifices to meet long-term goals.
So, if you are ready, start a conversation about finances with a young, impressionable mind who has yet to develop bad habits. But keep it simple, generic, and age-appropriate. In time, they will trust that they can come to you with money and other important questions. And, if you can be honest and lead by example, your kids will smile in appreciation, at a future date, for your wise parenting decisions.
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