Discussing Financial Decisions with Your Kids

David Sung | September 25, 2012

 If you’re a parent, you know that children are a big influence on your financial situation. The latest estimates state that raising a child for 17 years can cost $235,000*! Don’t forget about college.  Parents are looking for help and who better than your children to help you balance your budget?

The idea of involving your children in your financial strategy isn’t new. For generations, parents have been doling out allowances for chores, good behavior, and doing well in school. But as your children get older, money should be more than a way to get what they want.

It’s Everywhere!

Businesses are making it their mission to have their products and services more accessible to consumers. Everything is about convenience and it’s showing up in the most unlikely places. Have you seen the latest vending machines that take credit cards? With a swipe of your American Express, Discover, MasterCard, or Visa, you can easily enjoy a beverage of your choice at the Paris Hotel in Las Vegas, NV. While we know your child is unlikely to find themselves at the Paris Hotel, this is a sign of what’s to come.

If businesses are making it more convenient to spend money, the opportunity to bust your budget is even greater. With all these signals encouraging you to buy, it’s even more important that you keep your children on track by educating them on financial decisions.

Education

In many school districts around the country, students are being taught how to manage their personal finances. However, a lesson without practice will hardly become a habit. To reinforce what they learn in school, consider these tips:

  • Lead by example. If your child sees you making smart financial decisions, it will be easier for them to adopt a pattern of behavior.
  • Talk about financial situations. If you’re wary on how to do this, start with something small like planning a budget for a grocery list together. This will help them understand the decisions made behind every purchase. It will also open up lines of communication for future situations.
  • Let them contribute.  This doesn’t necessarily mean making your children pay the house bills. But we know children can remember things that affect them. If they earn allowances or have a part-time job, talk about dividing the costs of things that they want.

Our educators can only do so much when it comes to money management. It’s important that parents pitch in too. If not, young adults will head off to college, where washer and dryer machines now accept credit cards, and spend more than you would think possible on laundry.

In Case of Emergencies

Unexpected situations happen to everyone and more often than not, they affect people financially. For children however, the connection isn’t so clear, but parents know how hard it is to have to stretch finances. If an emergency comes up, it’s a good opportunity to explain the financial decisions that you’ll have to make and reinforce positive habits.  Instead of children believing that they can’t get what they want, they can start to see conservative spending habits as a way to get what they want in the long-run. Use your discretion on what age will be appropriate to have this discussion with your children. Teenagers can understand a payday loan process better than a seven year old. A family game night with monopoly could be a great way to get your point across.  Want more creative ideas? Visit Mint.org for more financial tips and games just for kids.

We know talking about money with your children is a little unconventional but it’s a smart way to start habits that will be with them for the rest of their lives. Do you have questions for the Cash Store? Leave a comment or connect with us on Facebook!opportunity to explain the financial decisions that you’ll have to make and reinforce positive habits.  Instead of children believing that they can’t get what they want, they can start to see conservative spending habits as a way to get what they want in the long-run. Use your discretion on what age will be appropriate to have this discussion with your children. Teenagers can understand a payday loan process better than a seven year old. A family game night with monopoly could be a great way to get your point across.  Want more creative ideas? Visit Mint.org for more financial tips and games just for kids.   Sources and images: Huffington Post Soda Machine Washing Machines

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