Financial education has always been a weak area within education. Talking about money and understanding money management, debt, loans, interest, and credit is rarely laid out to people until they get to college or graduate from high school. That’s why we wanted to start the conversation on how to talk to your kids about money, so they are better prepared for the real world.
Talk About Money Young
When you are having money conversations with younger kids, this can be a little trickier. A few ways to teach them about money and talk about it is to bring them into your monthly finances. Let them handle the money at the grocery store for the cashier or help you pay bills that month. Another thing you can do is play games that relate to finances with your children like Monopoly.
Use Visual Aids
No matter what age, learning about money can be confusing. Using visual aids, you make yourself or find online can help! Draw things out, find online videos or use real money on the table to act out what you are trying to explain. Hearing it and seeing it will help your child understand what you are trying to teach.
Start Saving Early
No matter what age your child is, open a savings account. This will help your child understand saving money and know how much money they have for spending. Add their allowance, birthday money or salary into their account and work with them each month to see how much they have and if they’d like to spend it. This allows them to save for future things while also understanding that once that money is spent, it’s gone. Then you need to work for more money!
Show Your Bills & Loans
As your child grows up, have them be a part of paying monthly bills and loans. This will show your child what they can expect when they are no longer living with you. Then they won’t be surprised by rent/mortgage, utilities, groceries, internet, cell phone fees and beyond. Having them prepared for all expenses to come and having an actual understanding of those monthly bills will help them exponentially.
Explain Debt
This is crucial and is never talked about enough until it's too late. While paying monthly bills and working on saving, talk about debt. Explain that a credit card is not free money and that any loans you take out have to be paid back with interest. This will help your child understand the true meaning of debt and what to avoid so they don’t make mistakes that you may have made.
Discuss Taxes
When your child is older, it’s important to explain taxes and show them what you mean by pulling out a paycheck of theirs or yours. During tax season, show them how you file your taxes if you do them yourself or explain where they can go to have someone file for them. This allows your child to understand the process and know their resources, so they aren’t confused or make mistakes the first time around.
We hope this gives you a good start on where to begin when talking to your child about finances! We are happy to help you open a Youth Account to aid in this discussion as well as answer any questions along the way.
