Talking about money with your children and grandchildren isn’t always easy — but you will be doing them a tremendous service by preparing them for the real world. Being financially literate and understanding how to think logically and critically about one’s economic decisions can make a big difference in life. Teaching the following lessons will help your kids/grandkids be more stable and more successful.
• Give an (Earned) Allowance. One of the best ways to teach kids about managing money is to allow them to have a small allowance of their own. Encourage them to save and to budget — but give them the freedom to make mistakes. The best way to learn is through experience, and now is the perfect time to gain experience while the stakes are low. We do recommend giving allowance as a payment for doing extra chores around the house: studies have shown that this helps children value their earnings more while understanding the importance of work ethic.
• Use Everyday Situations to Talk About Money. Choosing groceries at the store, paying your monthly bills, and setting up your budget are all excellent opportunities for learning moments. The best way to make financial lessons “stick” is to integrate them into your daily life: kids are more likely to find these lessons relevant. Simply “preaching” about such concepts, on the other hand, can be boring and ineffective.
• Help Teens Take Important Steps toward Financial Independence. Setting up a bank account, getting a debit card, filing for student aid, and other important steps toward financial adulthood that your teenagers should be taking. Help them through these processes, but give them enough autonomy to actually learn and become more independent.
• Set a Good Example. Children are more observant that you think. That’s why it’s so important to set a good financial example. Spending within your means, paying your bills on time, and establishing a diverse investment portfolio are all good ways of doing this.
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