Now more than ever, we have to teach our children the lessons they’ll need in order to avoid some of the financial disasters that have befallen our generation.
Are you a parent who hasn't done so yet? Then it's time to change that today. Here are five steps you can take.
5 Steps to Making Them Financially Responsible
1. Don't hide the truth. Take responsibility for teaching your kids the financial facts of life. Just like it's important to be upfront with them when the family is having financial difficulties, it's important to answer their questions about money honestly. Don’t assume that they’ll learn about debt or interest rates at school. They should, but very few states require personal finance courses to be taken.
Don’t assume that they’ll learn about debt or interest rates at school. They should, but few states require personal finance courses.
2. Teach them that money is finite. "If you don’t have the money, you can’t spend it." Wow, what a concept! Remember to reflect this attitude through your spending habits, as well, by not charging unnecessary things to credit cards or saying things like "It's too expensive ... but I just have to buy it!" Explain what a budget is and keep up a dialogue about how much money is available to spend when shopping together. Start young teens on a clothing budget and make them accountable for sticking to it.
3. Differentiate between want and need. It's easy for these concepts to blur for kids. Explain to younger children that you will provide their "needs;" however, older children will have to earn the money toward their "wants." That's especially true when we're raising kids in a high-pressure consumer culture—one that encourages many to feel deprived if they don't have the latest smartphone, the hottest 3D video game console or the most expensive pair of sunglasses.
4. Make them work. Remember those “grunt” jobs we all had as teens? We bagged groceries, delivered newspapers and pumped gas. Today, many young people don’t think about any kind of work until they graduate from college, which is too late. We learned a great deal from those experiences—allow your children to have that same privilege. Nothing teaches you about how time relates to money like holding a job.
5. Give them your time. If you give your kids things because you feel guilty that you're not spending enough time with them, you're sending a message that things can replace love, which will steer them toward "things" for comfort. No matter how busy you find yourself, make sure you set aside a specific, regular time for you and your child. Put this on the calendar as you would any other appointment. Also, be transparent and explain why you spend time away—and that you cherish the time you have together.
If Your Family Is in a Financially Tight Spot ...
So many of us feel that we must shield our children from any hardship, including financial difficulties. But if you want your kids to be secure, informed members of your family, transparency is essential. Parents must discuss money—especially if there is a change in income level—openly with their children to reduce the anxiety that can come with change. Approach the subject directly, explaining things in simple terms.
With younger children: Explain that we get money by working and sometimes money is more plentiful than other times. Tell them that things have changed, and that for a while the family will not be able to make all the purchases they're used to, or that things might be different ("We won't be going out for ice cream on Friday nights—instead, we'll have a sundae bar at home!"). Very young children are readily adaptable. If there is a change in circumstances—like there is normally a car that takes them to school, but the next day there is no car—they may get upset, but they will accept it, just like everyone else in the family.
With older children: They can understand the nuances of the situation and can even participate in finding solutions. Lead the discussion with them on how each family member will help get through the tough times: Who will give up which extras and who can earn extra spending money or help with additional chores so the parents can hunt for other income? Make it clear that everyone, including parents, has to sacrifice some things for the good of everyone.