It’s time to talk money with your tweens and teens – here’s how

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Teaching your children different financial skills such as paying bills and managing credit cards can prepare them for greater financial success in the future.

Kids watch – and it’s not just behaviors like kindness and empathy that can make an impression.

They also see how their parents deal with money, for better or for worse.

“I would like to be taught how to pay bills and the importance of paying them on time,” said Amiyrah Martin, mother of three from Columbus, Ohio. “As parents, we miss the opportunity not only to be transparent about the bills that come into our home, but also to show children how those bills are paid.”

Other parents have told me that they wish their parents had taught them the basics of budgeting, savings and credit cards, as well as more advanced topics such as investing, mortgages, managing taxes, negotiating salaries and calculating retirement savings.

Why aren’t conversations about money happening? Shame is a common reason.

Shame or embarrassment about financial mistakes can prevent parents from having positive conversations about money with their children, said Monica Eaton, certified financial education instructor and founder of Alconbury Press, a media company focused on financial literacy for children.

Eaton encourages parents to forgive each other for past mistakes, recognizing that this can be difficult if you are still living with the consequences of your past. “By making peace with the financial mistakes of the past, parents may be in a better position to guide their children towards positive financial behaviors.”

You don’t have to dwell too much on financial difficulties, advised Beth Kobliner, author of “Make Your Kid a Money Genius (Even If You’re Not).” She recommended being honest but brief. “You don’t have to go into sordid details, but if, for example, credit card debt has kept you from achieving certain goals in your past, let them know.”

You don’t have to go far to get started, because there are a lot of learning moments around money every day. And it’s best for kids to experiment and make mistakes with their small allowances when the stakes are low. Here are five ways to approach money with tweens and teens.

Identify needs versus wants

One of the cornerstones of conversations about money is identifying needs versus wants. Before you go to the store with your kids, Kobliner recommended being clear about what constitutes a need, like milk, versus a need, like chocolate milk.

“It’s fine to indulge in small needs once in a while if your family’s circumstances allow it, but needs always come first,” Kobliner said.

Keep it simple if your child is begging for something like candy at the cash register. “Don’t lie and say you don’t have enough money on you to avoid a crisis,” Kobliner said. Instead, she recommended a straightforward response such as, “No, I don’t think we need to spend any money on this now. We’re here for the basics today.

Kobliner noted that the importance of building this foundation is supported by research. A 2011 study from Duke University found that children whose parents gave in to the credit union were more likely to develop credit problems as adults.

Consider empowering children to identify needs versus wants. Lauren Schamaun, a Rockville, Md. Mother of teens aged 13 and 16, said she felt stressed about balancing her family’s meal budget with her children’s demands for money as they became teenagers and became more social with their friends.

Schamaun’s solution was to increase the allowances for his teenagers but stop giving them money for outings. “If they want to spend $ 12 on a bowl of smoothie, they can, and it doesn’t impact my budget anymore. I have seen them weigh the pros and cons of such spending and learn to manage their own money well.

Talking about general objectives

Talking about goals is important. “Lifestyle goals can impact the type of education and line of work that students pursue. These choices will have big implications for their long-term earning potential, ”said Eaton.

If college is one of those goals, Kobliner recommended that parents set up a dedicated college savings plan and start talking about college affordability in eighth grade. “Tell your child that you are saving money for college, ideally in a 529 (college fund),” she said. “Studies show that kids who know are more likely to go, regardless of how much their parents save. “

Avoid bribes

Parents are tempted to use money as a carrot for children, and some children may suggest financial incentives based on what they hear from their friends. A survey showed that half of parents give their children money for good grades, an approach Kobliner advised against implementing.

“Research from Harvard University shows that these bribes don’t work because external motivation isn’t what will get them to work hard in the long run. It takes internal motivation, that genuine sense of accomplishment, ”Kobliner said.

Teach children to save and invest

Conversations about what to do with money, whether it’s an allowance or some other way to earn, are crucial. Parents need to teach children to spend less than they earn, Eaton advised. “This is basic money management advice, and it’s essential. “

This important lesson is even on the minds of parents of preschool children. Liz Callin from Milwaukee is already planning to teach her 4-year-old. “I wish I had learned how important it is to start saving early and often. Saving 10% on every paycheck will be something I will teach my son when he is older.

Kobliner recommended that parents help their children open a Roth IRA to save some of their income. “This is a great opportunity to teach your teen the magic of compound interest,” she said.

Mathematics speaks for itself. Kobliner shared this simple and powerful scenario to use in conversations with children: Starting at age 20, if you save $ 1,000 a year and stop at age 30, you’ll have over $ 200,000 in retirement.

Explain the basics of credit card

Conversations about credit cards are important, especially if your teenager is heading to college, a common recruiting ground for enrollments.

“When I got to college I took out a credit card because of a free ‘giveaway’ and didn’t realize what APR meant,” said Emily Williams, a Malden, Massachusetts, mother of sons aged 4 and 9. “I couldn’t pay my monthly payments and I got into a lot of debt!”

Kobliner recommended explaining the concept of credit card interest to kids with an example like this: accumulating a $ 1,000 balance on a credit card but paying only the minimum each month would take over six years. to repay and would cost almost $ 600 in interest.

Children will eventually have to learn to manage their money. Keep conversations age-appropriate, focused, and fair.

A 2018 study by T. Rowe Price indicated that the tide was starting to turn, but Kobliner shared that years of past polls have consistently shown that parents are more likely to talk about financial problems with their sons than with their daughters. , which makes boys express more confidence. on financial matters.

“Many parents think their sons are smarter when it comes to money. This is nonsense, and it must stop, ”Kobliner said. “Especially when girls are facing a skyrocketing anyway to earn wages comparable to their male peers. Make sure all children are equally prepared for a smart financial life.


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