Teaching your children about family finances will benefit them presently and in the future. Understanding finances can enable children to develop a positive money mindset and habits as they mature. 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 daunting. However, once your monthly budget is complete, a sense of relief can open up communication lines. Your child may see the income first and be surprised at the amount of money you show them, but don't stop there. Review the monthly expenses with your child; they will see a decrease in available funds. This can be a wake-up call to your child and educate them that there is a cost to everything. It may also uncover some unanswered questions that lingered in their mind.
See my feature in Conversations To Have Once Your Teen Starts Earning Money.
Prepare Your Children for Generational Wealth
You may have additional funds available now that the budget has been reviewed. 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 to save may not have the same value as saving for a purpose.
Creating a dialogue around money lets your children know that discussing money is okay and encourages meaningful family conversations. You can ask your child if they have any money-related questions 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 how you manage your family's finances.
Teaching your children today can set the foundation for their financial decisions throughout their lifetime.
Originally published at https://www.harriscashcoach.com on May 4, 2021.