Since I found out my credit score yesterday, my minds been full of wonder around how I could have waited so long to get my financial affairs in order. I spend so much time trying to be a good role model for my kids but I’ve failed to keep a close look at my own credit report. Well, the past is the past and I’ve decided to look towards the future.
In addition to managing my own money better, I’ve decided to take my kids along for the journey. Since they’re getting a bit older now, they need to start learning how to manage their money. As much as I could keep them young and innocent, money is an important part of life in Canada – no one can deny it. I want my kids to be successful – whether they make a lot of money or not – but I really want them to develop a healthy relationship with money most importantly.
I thought up 8 ways that I can start teaching them how to manage their money. Here’s what I plan to do:
#1: Opening up about money –
It’s well known that communicating with children as they grow about our own values concerning money helps them to understand it better. In the past, my husband and I have kept things fairly quiet about financial affairs but I think it’s time they no more – for instance, how to save it, how to make it grow, and most importantly, how to spend it wisely. We also hope to educate ourselves more and want to share that knowledge from books or online sources with them too.
#2: Build good financial practices –
Even if you have all the money in the world, it’s important to realize that money doesn’t grow on trees. There needs to be some distinction that parents instill about the differences between needs, wants and wishes. Nowadays, there are so many kids who say that they need a new tablet computer or they need the latest video game. I want my kids to understand that these are really wishes and wants NOT needs. Hopefully, having them learn this as a lesson will prepare them for making good spending decisions in the future.
#3: Setting goals
My husband & I have agreed that as we develop our short-term and long-term goals, we’re going to share them with our kids. We want them to understand why we’re working so hard or why we aren’t able to buy them something. This, we feel, is fundamental to learning the value of money and saving. Young or old, people rarely reach goals they haven’t set. Also, we figure that nearly every toy or other item our kids ask for can become the object of a goal-setting session. This approach should help them become more responsible and build greater understanding.
#4: Teaching the value of saving
This is something my husband and I wish we did earlier in our lives. We want to introduce our kids to the value of saving versus spending. We’ll have to explain and demonstrate the concept of earning interest income on savings. What we may do to get the message across is consider paying interest on some of the money our kids save at home. This way our kids can deposit the money into the mom and dad bank, we can calculate the interest all together and they can see how fast money accumulates through the power of compound interest. As they get older, we can set up a special bank account for them both and even help them – when they get to that stage – to apply for their own credit card. All of these things will help them to understand the value of savings and lending.
#5: Bookkeeping time
Although this may not sound like it could offer the greatest amount of fun, there are ways to make it interesting. With the range of online budgeting tools available, you can make the logging of expenses a bit more fun for kids. By showing your kids how to keep good records of money saved, invested, or spent it can help to get them used to it early on. To be honest, I wouldn’t be surprised if my kids were better at this than me!!
#6: Go shopping…
Yes, you heard it right. I realized that my weekly shopping trips with my kids actually presented some great opportunities to teach them the value of money. I thought about it and came to the conclusion that the grocery store was my kid’s first spending experience. Since I always need groceries and am quite good at finding the bargains, I thought that exposing the kids to my smarter spending approach could help them learn a lesson or two. I’m all about grabbing products on sale, using coupons and comparing unit prices. To help my kids even more, I’m going to take time to teach them how to plan healthy yet economical meals, avoid waste and use leftovers efficiently.
#7: Allowing them to decide
One of my kids is earning a bit of money from a paper route. Part of me was going to let him go out and work and then take the money to put in the bank. However, I was reading that this isn’t a good approach as it will encourage rebelliousness in them – that’s the last thing we want. So, I’ve decided to allow him to make his own spending decisions – whether I like it or not. I guess it’s true that we learn from our choices – whether good or poor. I do plan on initiating an open discussion of spending pros and cons before more spending takes place so he can use common sense when buying.
#8: Family discussions about finances
This may be one of the most important steps we’re taking. Since my husband and I are committed to change things at home we want it to be a family effort. We feel that as our kids grow, this will be especially helpful as it is a time in their lives where they can start building savings and receive interest. We’re going to cover topics like the basics of banking, wise spending habits and how to minimize the use of credit.
There are two central themes here on what we’re about to do at home – communication & cooperation. As big of a step this is for our family, we’re overly excited to get going. Hopefully my kids will start developing a good relationship with money and – just maybe – my husband & I will learn something in the process too.
