Haven’t we all looked in our wallets at some point and thought, usually followed by some form of “If only…,” which can be anything from cheaper groceries to better life insurance. Our “uh-oh” moments can be big or small, but they come for us all and there is no way to avoid them. Yet as parents or guardians of children of every age, we have the responsibility to see to it that their “uh-oh” moments are fewer and smaller than ours. And how we go about doing that can make all the difference.
Break Down Big Topics
It’s a little bit too easy to look at hard topics and ask yourself, “What is a good dividend yield?” and get overwhelmed—even as adults. So if you don’t understand it, how do you expect your child to? The good news is there are a lot of ways you can break grownup things down. For example, as a tenant, you must pay rent, and as a business owner, you must pay taxes. These are big people examples that come down to a simple lesson—how to let go of money every so often.
If you give your child an allowance, set a date every week or month and have them set aside a specific amount that goes back to you, NOT into a savings account. When we donate or pay tax or rent, we don’t see that money again. Have them put aside savings, but get them accustomed to losing some of their money as well. The same scale down can be applied to lessons about how unsafe gambling is, how credit works, and so much more.
Give Them Real Life Practice
Cory Baxter once said, “The first rule of money is never to use your own,” before trying to get his parents to buy something he, himself, could have afforded. While it’s important that your children learn the value of saving money, they need to have a reason why. They have to understand that the point of money is to wisely use it and not abuse it. A good example of this is summer vacation. Why not have them help you make those financial summer decisions? Have them pay for all or part of the swim lessons they desperately want. Make them break down the costs of summer camp before you sign the release forms, give them a budget to plan a piece of the family trip with, or even assign them part of the grocery bill each month in exchange for getting the foods that they like. Allow them to experience just a small piece of adulthood now so they’re more familiar with it later.
Get Them Thinking Ahead
We’ve all heard the saying, “There’s no time like the present,” but what does that even mean to a child? To them, the whole world is nothing but the present. They don’t even think ahead about brushing their teeth, much less big grownup things. So if that’s the case, we need to do the thinking for them, but that doesn’t mean that they can’t do the work. For example, what about the almighty college fund? Your kids will have no interest in that for right now, but they will later. And that means they can still earn part of it themselves right now. Make games out of the chores they do for allowance. Have them sell lemonade with friends. Make them ask the neighbors if they can do odd jobs. The better the memories they have of earning money are, the more likely they are to keep doing it instead of coming to you for raise’ whenever they need something.
Honestly, in short, your children will have to rely on you to make the financial decisions for a long, long time. But the more that you teach them by example, giving them responsibility, and telling them about what the future holds, the better off they will be when that time to shoulder the burden finally does come. And it’s so very important to do it now. As the saying goes, “There’s no time like the present!”