I often hear parents say they want to provide their children with a better life than they had. In a lot of ways that includes, removing the burden of financial hardship from and conducting financial discussions away from their children. Depending on a child’s age, there is an appropriate allowance and motivation for exempting your kids from these conversations. However, at a certain point, children too removed from financial discussions are being denied the opportunity to learn valuable skills in financial management and budgeting. Many millennials and Gen Xers grew up in homes where money was a taboo subject, and that avoidance has trickled into Gen Z’s education as well. We need to be the generation of parents that removes the stigma around discussing finances with our kids.
A few ways to encourage financial literacy are giving the young person in your life responsibility, allowing them to be a part of the conversation, and lastly supporting them in their endeavors to build their own financial legacy.
1. Give Them Responsibility (and the opportunity to make mistakes)
Giving a young person more responsibility, especially in terms of money, can be a daunting initiative. Thankfully, some companies have heard this cry and now provide curriculum and programs to jump start your success.
Use Programs like Greenlight to Teach Your Child
Greenlight (not sponsored) is a great tool to teach your children how to manage their money while giving you the reigns to help facilitate their spending habits. It’s easy to tell our kids that they should save money and spend it wisely, but it’s hard for them to grasp that sentiment without experiencing it themselves. Programs like Greenlight will help you give them access to budgeting practices from a young age. One of the best things my parents did for me growing up was give me a budget for back-to-school shopping. I had a set amount I could spend on back-to-school items – it made me shop in the clearance rack because I wanted the most bang for my buck. I still remember shopping at Abercrombie and Fitch when I was 10 for my first day of school clothes and being hyper aware of the price tag as I strove to make the best choices with my limited means. That experience taught me the value of budgeting in a way that was tangible and relatable for my 10-year-old brain.
Encourage Your Child to Join the Workforce
If you have been listening to the news lately, you know that there is a mass labor shortage. This has created an abundance of job opportunities especially those geared towards a part-time position. In 2019, 39.9% of people ages 16-19 were a part of the workforce. Comparably, in 2011 only 37% were in the workforce. There are many outlets demanding your child’s attention, whether it be school, sports, clubs, etc. A job will give them confidence and help them build a healthy work ethic. A job also sets up opportunities for them to experience what it is like to make decisions with money they have earned; not just money they have been given. These moments can allow your child to make mistakes with money while still under your guidance and with your financial security blanket. This may not be an option for every child depending on their situation, but it is one that can provide unmatched life skills while in high school.
2. Allow Them to be a Part of the Conversation
It is important to welcome your children into the conversation of your family’s financial position. A great way to invite them in is to tell them your family budget. When I was younger my parents would tell me our grocery budget and I became the best accountability partner. My mom tells a story of a time we went over our grocery budget, and I began saying “Oh no! Mom, we went over budget! What are we gonna do?” I harped on it so much that the people in line thought my mom couldn’t afford to pay for our groceries. She had to explain that I simply knew the family budget and wanted to keep the family on track. To this day it makes my family giggle, but it brought home to me the importance of budgeting with my family. When children aren’t a part of the conversation, they assume they are exempt from financial responsibility. Letting them see your budget and explaining the bills you must pay gives them insights to know how to what it means to run a household and manage finances. As they say – children are sponges that absorb what happens around them, whether we like it or not. They won’t do as their parents say, they will do as their parents do.
3. Become Financially Literate
A program we have come to love at Wiser is the Dave Ramsey Financial Peace University curriculum for middle schoolers, high schoolers, and adults of any age (not sponsored). For $25 you can enroll your child in the curriculum for middle school or high school ages. This gives them the opportunity to learn about important financial principles and practices. At the same time, you can be taking a similar course for adults for $80. During your family time together, this can become a topic of conversation for you to explore and teach one another about. If you have questions on how to access the course, contact us at Wiser Wealth Management and we will walk you through it.
Ultimately, there are a lot of topics we should try to shield our children from. But if we don’t define some issues, like finances, for our children someone else will and we run the risk of setting them up for a costly learning curve once they leave home. We want you to equip the young people in your life to make strong financial decisions. This happens best within the home. Allowing your children opportunities to learn from you and letting them into the conversation of your family’s personal finances are some of the best ways to ensure they become financially successful adults.
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Financial Planning Associate