By Richard M. Rosso, a financial advisor on NerdWallet’s Ask an Advisor.
1. Be an example
Here’s an easy one because you don’t need to say a word. Your children are observing your relationship with money. What is your outward expression towards debt, savings and general household financial management, especially when communicating with the family? If your relationship with money is positive and one of control and discipline, your children will learn from the example. If your relationship with money is negative, stressful, extravagant or reckless, the kids will pick up on that, too. Smart money beliefs and actions can lead to smart money reactions by the younger generations around you.
2. Anytime is the right time
Simple questions, framed in a positive tone, will provide just the right spark to get the money conversation underway. I call it “financial curiosity.” And you can be financially curious with your child anywhere – at the mall, at the supermarket, in his or her room. If your teen makes a purchase, inquire about it with sincere interest.
What compelled them to buy that particular item? What other choices are available? Is this item something the family may find useful? How does it work? Will this make their lives better, easier, more fun? How so? Was it a challenge to save up? You’ll gain a lot of information on the motives behind the purchase, and discussions about other money matters will blossom.
3. Get them involved
Talking about money is fine; however, it doesn’t compare to having your kids experience money management firsthand – something I call being “money active.” Have the kids be responsible for specific money projects, let them fully experience the rewards and feel the sense of accomplishment when the plan is executed. For example, provide children an opportunity to budget a family vacation or weekend getaway and then all enjoy the fruits of the labor. Partner with them to set savings goals for future purchases, especially the bigger-ticket items.
Assist your teens with the research, or offer to match a percentage of the purchase price as a reward for good money habits. Are the products or services that the kids are using viable investment prospects? Now’s the time to begin the investing conversation. And there’s no better way to ignite the money flame than a possible investment into a company that manufactures a product or provides a service the children are passionate about.
4. It’s OK to seek help
So you’re still having some difficulty getting the conversation going? Let someone else help you get the fire started. Seek assistance from an objective person who would be willing to provide money lessons to the kids; perhaps someone in the family, or a friend successful with money management, would be excited to share an experience. Don’t be reluctant to seek assistance and allow someone else to tee up your involvement.
5. Make money interactive and fun
You can start a simple budget with kids. Out of each dollar of allowance, figure out how much goes to savings, to charity and to spending. You need to help children establish guidelines early on. There are several products that make this division of money fun, like the Moneybox available from Moonjar.com. Also on the site is an item called Money Conversations To Go, which gives prompts to jump-start fun family discussions about money.
Have children begin handling coins at an early age; it’s a great way to get very young children comfortable with money. When my daughter Haley was 3, I had her handle nickels, dimes and quarters. They were shiny and fascinated her a bit. From an early age, I would have her place the coins in a bank and shake up that bank from time to time, and it would sound like a rattle of sorts. Placing coins in the bank was a sense of accomplishment for her, and it started her on the road to fiscal success. Now, at age 15, she’s become a first-rate saver!
Start the kids early. Get the conversation going. And watch your children prosper.