When is the best time to talk to your kids about money? Right now! No matter their age, you can talk to your kids about finances to give them a good foundation for their future. You can discuss your own financial goals and plans, explain the stock market and what it means to be a shareholder, and teach them about credit, interest, and investments in a variety of ways.
Many young (and older) adults struggle with managing their income, and the statistics often speak for themselves. For example, 44% of Americans would have trouble handling an emergency expense of $400, and about a third of the population has $0 in retirement savings.
To help your children grow into the most financially secure adults possible, tell them the things you wish you knew as a young adult. Maybe they will listen and maybe they won’t, but when the time comes, they will have the foundation they need to make good financial decisions!
A great way of doing this is by using practical examples as lessons—take your children to the store with you and show them how you shop within a budget, have them sit next to you as you look over your investments, and take them on your bank-related errands.
Keep reading for some useful examples of how you can give your kids quick financial lessons in real life.
Teaching Kids About Money and Finances
Paying Bills and Organizing Money
When you get paid and you’re about to take care of some monthly bills, include your children in the process. You don’t have to show them exactly what you make and how much each bill is, but you can explain your organizational spreadsheet, notebook, or phone application to them. You can talk about how you portion out your income (monthly expenses, savings, investments, retirement funds) and the importance of each category.
What Is Investing?
Children can understand the basic concept of investing from a very young age, especially if you teach them with games and fun examples. When you think that your kids are old enough to understand the real-world ins and outs of investing, walk them through your own investments and explain why you made the decisions you did.
Financial Planning and Forward-Thinking
Future planning is a huge part of financial security. This includes both short-term planning for family vacations and large purchases, as well as long-term planning for retirement.
You can use the next family trip as a chance to talk about the forward-thinking that is needed to save and plan for a vacation, or to explain the other factors that allow you to spend money on a trip (great credit rewards, smart budgeting, different kinds of savings accounts, etc.). Additionally, be open with your kids about what retirement is, what steps need to be taken in order to retire at a decent age, and what you are doing to get there.
Use Shopping Trips as a Teaching Moment
The store is a great place to explain concepts like “needs” and “wants” and to talk about budgeting. You can also start a conversation about taxes and explain some of the simpler topics surrounding how the economy works in terms of supply and demand and fluctuating prices for certain goods. Of course, age-appropriate language that doesn’t bore your children to tears is preferable!
Conclusion
These four situations/lessons are just a few examples of how you can teach your children about money and the importance of financial planning. You don’t need to wait until their teenage years—from the time your kids are toddlers, they can start learning about the value of money and the benefits of saving and investing.
You can make these conversations fun and work them into everyday life. Remember, even if it seems like your kids aren’t taking anything you say to heart, they’ll still be more financially literate than someone who heard about retirement savings for the first time in a college lecture hall.