It’s a new year and if you’re like two-thirds of Americans, you have a 2023 New Year’s Resolution that sets financial goals, according to a recent survey from The Ascent via Pollfish.
We often start with paying off debt, building savings, or beginning to invest. All good things! But what if you have kids? What can you do to ensure they’re being set up for success when it comes to financial education? Maybe you have made your own mistakes and don’t want to pass that torch to them. I have some good news…. you can help them no matter where you’re starting from with just a few things.
Even if you’re not where you want to be with your finances, you can still pass on the skill of learning about money right now no matter what your bank account balance looks like. According to a recent study by Credit Karma, 41% of American adults say they had to teach themselves about money and 51% of Millennials say their level of financial knowledge keeps them from making financial progress.
That doesn’t have to be the story for your kids. Here’s a few things to start doing today:
1. Change the way you talk about money to your kids
How you talk about money will impact the way they think about money and the beliefs they have about their ability to make, spend, save, invest and handle money. If they’re hearing that it’s stressful, you’re always struggling and that you can’t afford things, they will grow to believe that money is difficult and stressful. I’ve never met someone with those beliefs about money that is thriving financially.
Here are a few swaps you can make:
- Instead of: We can’t afford it.
Switch to: We have other priorities in our budget right now.
- Instead of: I don’t make enough $
Switch to: I’m working on ways to increase my income
- Instead of: We’re broke
Switch to: This month is going to be a bit tight for us so we’re getting creative with our budget
Incentivize them learning about finances like you would chores or good grades
I learned this from a mentor and it has made such a difference in how I parent. If I want my kids to learn something that I don’t currently feel equipped to teach them, I reward them for reading a book or watching a video about it.
For example, we’re not quite at the stage yet where we’re looking at colleges but I know it will be here before we know it so I offered my daughter $5 to watch a detailed video about paying for college, what student loans are and the financial aid that is available to her and afterwards we discussed it.
There are lots of videos about finances for kids at pretty much every age. For a few of my favorites here’s a previous blog post I did about this:
Let them see you handling money, making buying decisions, and having money conversations
I myself have given the advice to avoid taking your kids to the store if you can because you will typically spend less when you don’t have them with you but over the years I’ve seen how valuable those interactions are for them to see. Imagine if you had never been to a grocery store and then at 18 years old were expected to navigate that on your own.
So while I usually don’t bring all my kids with me, I do intentionally bring them at least once a month, tell them what our budget is for that trip, allow them to bring their own money if they want to buy something, explain adding sales tax, have them hand the cashier their money, see me comparing prices, all the things.
I want them to see all of it so they will feel like confident consumers as they grow.
I’ve even had my oldest sit in on my monthly budget update so she could see how I plan for upcoming expenses, transfer money to savings, and see our progress on debt payoff. I find that when you involve them in the day to day, you don’t need to have as many sit down conversations about how to handle money because they watch you do it every day.
These 3 things are simple but will help your kids in their journey towards lifelong healthy money habits.
What else do you do to educate your kids about money?
Praying 2023 is your best year yet!