How To Raise Financially Savvy Kids

Changes in the economy in recent years have brought to the forefront the importance of being a financially savvy adult. It only stands to reason that the skills needed to properly manage money begin when everything else in life begins- in childhood. As a society it appears we have strayed from some of the lessons learned in earlier generations and the results have been pretty devastating. For this reason, parents today should be not only be concerned over how they are managing cash, but also the lessons they are teaching their children. The following tips will help you start your children on the right path toward money management as an adult- even if you are still on the the journey yourself.

• Talk about money- There are so many parents today that don’t take the time to actually talk to their children about money. Conversations about money and how it is earned and spent should begin at an early age. Keep in mind that the conversations should be age appropriate, but children need to know that money does not magically appear, nor is it available in an unending supply. By teaching your kids the value of money, including what it takes to get it (hard work) and the importance of managing it well- you lay the foundation for the more advanced conversations that will come in the future.

• Learn how to say “no”- Life is not easy and we don’t always get what we want, making this an important lesson to learn at a young age. For families struggling with a financial hardship, saying no is not always an option but rather a fact of life. This lesson, however is not one reserved for the children of cash-strapped parents. Even if you are in a position to say yes to all of your child’s requests, in doing so you are not teaching your kids the reality of the world in which they live.

• Make money management a family affair- As your children get older, money management lessons become more complex. Beyond just teaching the value of the dollar and the importance of a good work ethic, you should also begin including your children in basic money management. Learning how to balance a checkbook or calculate interest on savings or in some cases debt can be an eye opening experience for young teens. The point is to not only teach your children the basics of money and budgeting but to also point them in the right direction to achieve long term financial goals.

For parents dealing with a financial hardship, the first instinct may be to shield their children from the situation. While it is true that children should not be subjected to the worry and stress of debt- there are lessons to be learned in money management. By showing your children where you have made mistakes and the steps you are taking to rectify the situation, you show them that not everyone does it right the first time around- but they can also learn from your mistakes in the process.