Teaching your children about family finances will benefit them presently and in the future. Understanding finances as a child can enable children to develop a positive money mindset and habits as they mature in life. Explaining the family budget, letting them know about your financial goals, and asking them if they have any questions lets children know that it’s okay to talk about money openly.
The Family Budget
Opening your monthly budget tracker and showing your children your income and expenses may seem like a daunting task. However, once it’s done a sense of relief can result and it opens up the lines of communication. The first thing your child may see is the income and be surprised at the amount of money you show them, but don’t stop there. Review the monthly expenses with your child and they will be able to see the decrease in the available funds. This can be a wake-up call to your child and educate them on the fact that there is a cost to just about everything. It may also uncover some unanswered questions that lingered in their mind.
See: 6 Tips for Getting Your Kid Involved in the Family Budget This Year
Now that the budget has been reviewed, you may have additional funds available. It may be helpful to discuss your financial goals with your child so that they understand that this is not “leftover money”. This can also be a method of instilling goal setting into your child’s life. Setting goals around money sets a sense of purpose for saving and earning money. Saving just to save may not have the same value as saving for a purpose.
Creating a dialogue around money lets your children know that it’s okay to discuss money and encourages meaningful family conversations. You can ask your child if they have any questions about money to continue the conversation. If you don’t have the answer to their questions you can let them know that. It can be a learning moment for everyone and enable you to improve the way you manage your family’s finances.
Teaching your children today can set the foundation for the financial decisions they will make throughout their lifetime.
See: Warren Buffet's 6 tricks to teach kids about money.