Starting Young: Discussing Finances with ChildrenDecember 17th, 2013 by The JetSetter Team | Comments Off on Starting Young: Discussing Finances with Children
There comes a point in every person’s life where they are required or at least prompted to discuss money with a child or very young person. As a parent, aunt, uncle, cousin, etc. you may be asked questions regarding finances that leave you struggling to find an answer. Financial literacy is important at any age—visit Jason Hartman’s Young Wealth to find out more—and the opportunity to teach someone about money may help to clarify your own values and beliefs about the topic.
Taking to children about money centers around establishing the why of things. “We can’t afford it” isn’t good enough because it is ultimately a choice—explain why it is that you cannot afford something. This way, they learn about financial priorities and goal setting. Go even further and remind them what it is the money is instead being spent on. If it’s a fun vacation to the Oregon coast, remind them how much fun it was last time and explain your choice to save instead of spend money on others things. Suggest that they spend their own money if the item they’re requesting if it is very important to them. This way, children learn to individually manage money and think about how they spend it because there is a finite limit to the cash.
When one financial decision is made in place of another, make sure to focus on the positive reasons for the decision, even as you move on. No one should feel a sense of deprivation at the decision being made. Instead, they should feel a sense of confidence in the financial decisions being made.
It is also important to remember that not all financial decisions are to be shared with children, especially in times of financial difficulty. Imagine the amount of explaining required to defend a financial decision to sell a house and move to a smaller apartment because of expenses. In these instances, simply make the most out of the decision—explain the positive things about the new home and approach it as an adventure, not a financial misstep. At the same time, make sure that children are learning how to make sound financial choices early in life so that they may not make the same mistakes in adulthood. Find classes at churches, libraries, or community centers and get excited about money, and (more importantly) about the opportunity to learn! (http://www.flickr.com/photos/vinothchandar/5265847730/)
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