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TALKING ABOUT MONEY WITH YOUR KIDS

MILLENNIAL SPENDING TIPS

We live in a consumer-oriented society where money is part of daily life. American kids are always seeing advertisements encouraging them to buy, buy, buy. Once they leave high school, young adults are often flooded with credit card offers. Yet, most lack a basic understanding of personal finance. Some are piling up thousands of dollars in credit card debt. This is why talking about money is so important.

You play a role

As a parent or guardian, you have the opportunity to educate your children about smart money management. Understanding the fundamentals will help them to become financially self-sufficient, with the knowledge to take advantage of financial opportunities. Teaching your kids to develop a healthy relationship with money can have a positive, lifelong impact — and improve your own financial knowledge, skills, and attitudes along the way. You can help them to build healthy, lifelong financial habits just by talking about money with your kids. Share your thoughts with them about how you make your daily spending and saving decisions.

Kids want to learn

Most kids are interested in money and recognize money management as an important step toward maturity and independence. Talking about money with them and teaching them about personal finance will show that you recognize they’re on the road to becoming responsible young adults. By gradually giving them more financial responsibility, they’ll gain experience in planning, making choices, and learning to live independently. It’s never too early to begin teaching your children the basics of good money management.

Most kids are interested in money and want the rewards of having money management skills. Here are teaching tips you can use to help them learn.

Make it a (daily) conversation

Engage your kids in age-appropriate conversations about money.

Start young

As soon as your children can count, you can introduce them to money — dollars and cents. It’s never too early to start.

Discuss the fundamentals

Once kids understand the idea of money, introduce them to basic concepts about how to use money wisely. The Hands on Banking program offers money management education designed for students from 4th grade through college.

Encourage your kids to:

  • Set goals and save for them
  • Make money grow with interest
  • Recognize needs vs. wants — and make tradeoffs
  • Be a smart shopper
  • Keep good records

Let kids make decisions

Talking about money is no substitute for hands-on practice. Giving kids an allowance provides them — on a small, manageable scale — to make their own decisions and their own mistakes — and live with the consequences. Consider an allowance in an amount sufficient to cover essentials and some items that are just for fun. This approach will help the child recognize the difference between needs and wants and set spending priorities. Help your child to create a personal budget and map out a spending plan. Encourage your children to routinely save part of the allowance they receive.

Discuss the pros and cons of a part-time job

Having a part-time job can be a good way for young people to learn more about earning money and how to manage it. However, be sure that school remains their top priority.

Start slowly with credit cards

Credit cards can provide financial flexibility and convenience, but many young adults get in trouble with credit card debt. One option to consider is getting a low-limit credit card for your teens while still in high school. You can teach them how to manage a credit card account, including how to save receipts, check their monthly statements, and charge only what they can afford to pay off completely each month. By learning to be responsible with credit early, your children may be less likely to have debt problems in the future.

Teach a commitment to charity

Encourage your kids to make a habit of giving to charitable causes. Ask them to consider what causes they care about personally and how they would like to make a difference in the world around them. Save any requests for donations you get in the mail and ask your kids to help decide where your family should make donations. Also, encourage your kids to volunteer and consider volunteering with them. Volunteering can be a powerful experience for both parents and kids in terms of recognizing community needs and the benefits of giving back.

To learn more, go to https://handsonbanking.org/resources/talking-about-money/