5 Ways to discuss finances with your kids
It's imporant to discuss finances with your kids and make sure that they are armed with good financial information, especially when it comes to helping them become better prepared to make smart financial decisions throughout their lives. As a financial expert and parent, I've learned how to pass on the basics about money to kids without them realizing they are learning the important lessons of spending, saving, inflation and even diversification.
Throughout the summer, there will be many opportunities for parents to have money conversations with their kids and take advantage of teachable moments to improve their child's financial understanding.
How to discuss finances with your kids:
Take advantage of more time together
During the summer months, many parents will be spending more time out and about with their kids, whether it's running errands, back-to-school shopping, buying groceries, or going to a movie. These everyday activities create an opportunity to reinforce money lessons and make them more memorable.
Involve your kids in vacation planning and budgeting
Including your kids in discussions about where to go on vacation, as well as how to spend money and family time once you're at your destination, will give them a better understanding of the trade-offs inherent in making spending decisions – especially when there is a limited budget. Apply this discipline to conversations about where to eat, what activities to participate in, and what souvenirs to buy. Discussing plans for vacations in future years also provides an opportunity to provide a longer-term perspective on setting goals and understanding the impact of inflation.
Create a plan for summer job money
While it's reasonable for kids to spend some of the money they earn right away, summer jobs also set the stage for thinking about setting future goals and present an opportunity for reinforcing lessons around saving vs. immediate spending. Putting money aside for longer-term goals also allows for discussions about the importance of diversification and staying ahead of inflation.
Set discretionary spending limits for special summer activities
A day at the pool, a sporting event or the amusement park, and other activities often mean concessions and the potential for other purchases – and an opportunity to reinforce simple budgeting and wise spending lessons. Rather than responding to requests for money throughout the day, give your kids a set dollar amount when you arrive, leaving them to spend as they wish throughout the day. And, resist the temptation to open your wallet again if they come back for more.
Hold a family financial game night
If you have regularly scheduled game or movie nights as a family, why not turn some of them into dedicated family financial game nights. Online games such as Disney and T. Rowe's TheGreatPiggyBankAdventure are a great way to turn financial education into a fun and interactive family activity. With financial lessons embedded into the game play, kids will learn without realizing it. And, with the common experience of playing the game together, it will be easier for parents to have conversations about money and to help turn everyday activities into teachable moments.