Kids notice everything whether you think you’re paying attention or not. They repeat the curse words you uttered when you stepped on a toy, and they share embarrassing family secrets with their friends.
Children around you will also notice from a surprisingly young age who has money, who doesn’t, and how your household handles money compared to others. They hear arguments and feel stressed. Every time you make a financial decision, you set an example. “You are the mirror and your child is the sponge,” says Jordan Wexler, co-founder and CEO of EarlyBird, a registered investment advisory firm that allows parents to open custodian and college savings accounts for their children. says.
So, while there’s no pressure, it’s important to model positive financial behavior to all the children in your life, whether they’re parents, relatives, or close family friends. First, we will understand your own way of thinking about money, and then provide lessons appropriate to your age.
establish family values
If you don’t set goals and priorities for yourself, it’s difficult to teach others how to spend, save, and donate money. Maybe you want to set up an annual budget for your philanthropy. Or maybe he wants to slowly save up for future expenses to avoid credit card debt. All of these decisions are tied to what you (and your spouse or partner, if you have one) truly value.
Kelly Palmer, founder and chief wealth officer of The Wealthy Parent, a registered investment advisory firm that provides financial planning for new parents, says that in a father-and-mother household, there is only one father. Instead, parents are encouraged to demonstrate that they are also financial decision-makers. “It’s important for kids to see women participating in these conversations,” she says.
When you feel confident in your decisions, it’s much easier to explain your thoughts to your children, and you can use your choices as a way to start thoughtful conversations with them.
Involve children and provide context
Going to the store, calculating the tip at the end of a meal out, making plans for your summer vacation – these are all opportunities to talk about money and values. But when you’re running errands in a hurry, you may want to ignore your child’s constant questions and get on with your day.
There’s no need to have deep conversations about money in the candy aisle while trying to convince a frustrated child that chocolate isn’t on the shopping list. However, you can always come back to this topic later, when the situation has calmed down and the memory of the chocolate you didn’t buy is not so vivid.
By providing context, children can learn why you make certain choices, why you buy a certain brand of toothpaste even though it’s more expensive (maybe your gums are more sensitive), etc. Or why day camping is possible this summer but overnight camping is not (so you can afford a family trip during winter break that year). Inviting kids into the push and pull of everyday financial decisions helps them understand all the factors involved in making seemingly simple money choices. When you become an adult, you can apply those lessons to your own life.
“One of the hardest things, and one of the easiest things, we say to our kids is, “We can’t afford it,” says Roberts, a certified financial planner and president and founder of the Financial Behavior Keynote Group. As one Mary Bell Carlson said in a lecture: A consulting and education company providing thought leadership on financial behavior change. “We missed the opportunity to discuss it.”
Recognize the comparison trap
Children realize that others live differently. My cousin has more toys, my school friends live in a bigger house, and my neighbors go on vacation every summer. Your values may be repulsed by seeing others get what they want. “When they go out, they’re going to be exposed to all kinds of emotions surrounding money,” Palmer said.
Carlson, who has a doctorate in personal financial planning with an emphasis in financial therapy, says don’t refuse when your child asks for something you’re not prepared to pay for. Ask her why she wants that item or experience. Discuss costs with them. Older children may be more willing to save and donate their pocket money. This is a great lesson on how to save money over time for a big purchase. The important thing is to show your children that they can ask money questions and be taken seriously.
“At the end of the day, it’s not about the money that really matters. It’s about the emotional connection you have with your kids,” says Carlson. “It’s about showing that we care about you, no matter what you have or don’t have.”
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This column was provided to The Associated Press by the personal finance website NerdWallet. Sara Rathner is a writer for her NerdWallet. Email: srathner@nerdwallet.com. Twitter: @SaraKRathner.
