Ray’s take: The March 2013 T. Rowe Price Annual Parents, Kids and Money Survey indicates that 73 percent of parents discuss money with their kids. This is good news! It’s an important part of a kid’s education to understand money and finances. Kids may not have to worry about mortgage payments just yet, but learning about money while they’re young can set them up to become financially responsible adults.
So what, specifically, should you discuss with your kids and when?
Age and maturity play a large part in when to discuss financial issues.
Let’s face it, kids aren’t always good at keeping secrets, so you may not want to be specific about how much money you make or your net worth. When they’re at a young age, it’s better to simply let them know you have enough money to take care of things but also need to save for the future.
Kids are also very perceptive about any financial stress they may notice between their parents, so having an honest, age-appropriate discussion will go far in alleviating fears.
Having regular discussions about money and finances is an important part of the learning curve for kids. It can help them understand why this year’s vacation may be different from last year’s.
As they get older and their understanding of money and finances grow, you can be a little more detailed about discussions. When the time is right, bring college, and any expectations regarding paying for it, into the mix.
Be sure to include your own financial independence in these conversations. The best gift we can ever give our kids is to make sure we are independent ourselves.
Dana’s take: When it comes to money, parents’ day-to-day actions speak more to children than our words.
Do mom and dad chase the latest designer “must-have”? Is the message “only the best for our family” or “check the sale rack first”? Is a shopping spree the weekend entertainment?
How about credit cards? How many are in your wallet and what do they see you buying with them? You can tell them to be wise with their money, but if you’re paying 18 percent interest to buy a rake, they may be getting a mixed message.
Start teaching financial responsibility as soon as a child begins noticing that buying things is a regular occurrence in life.
Additionally, being more aware of our own actions and how they relate to what we are telling our children regarding finances is a wise move on our part and may lead to better habits of our own.
Practicing what we preach should be a way of life, not just words.
Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at email@example.com.