How to talk to your children about money
Financial topics may seem challenging at first.
LINCOLN, Neb. (KLKN) – A new survey found parents are using the pandemic as an opportunity to talk with their kids about money.
Financial professional, Tim Kulhanek from Stonebridge Insurance and Wealth Management, says its important to start talking to our children about money at a young age and teach them to be financially independent.
“Financial topics may seem challenging at first, but you will be surprised what children can absorb,” Kulhanek said. “From about age five, children can understand saving and spending.”
How can we start teaching our children about money?
Teach how to save and give
- Teaching your child to save is an important step to prepare them for financial responsibility and a secure future
- Help them make regular trips to the bank and encourage them to save at least a third of what they earn
- Children may not be naturally inclined to give away their money, but helping others is a good habit to get into
- Establishing a pattern of giving will help kids remember to include it in their budget as they grow older
Explain how to budget
- This is also a good age to explain a budget and help your kids really understand the importance of having one and sticking to it
- Use your own household as an example; explain the different kinds of bills you have to pay and the consequences of not paying them
- A great learning opportunity is taking your kids grocery shopping with you. Tell them how much you have to spend on groceries and have them help you shop
- They will learn to comparison shop, see the amount of money you spend on everyday things, and you won’t bust your budget
Give an allowance
- As children get a little older, you can give them their own job at home, like setting the table or helping dry the dishes. Each time they do their chore, you pay them a small amount for a job well done
- A good rule of thumb for how much to give your children is to use their age. If they are 5, they get $5 for completing their chores that week
- Whatever you choose to give your kids – the amount matters less than the conversation you’re having with them about money
- You can also suggest other ways to earn extra money like babysitting, raking leaves or starting a lemonade stand
Let mistakes happen
- Don’t place too many restrictions on what they can buy. A child may purchase something that will lose its luster after a few minutes or break. If the child begs you to take them back to the store to buy something else, don’t.
- If your child cannot find something they really want, this would be a good time to encourage saving the money for later.
- Use these opportunities as teaching moments. Next time they will think longer about their purchase.
- Kids are proud of themselves when they make wise choices on their own and learn from their mistakes.
Kulhanek has a guide with activities and conversation starters for kids 3-18 on his website.