How to Involve Your Kids in Family Finances
One of the best gifts you can give your children is a good money education. Many people never get one or only learn about finances after they have been through a bankruptcy or had other upsetting financial experiences. By teaching your children about money from a young age, you are giving them a valuable tool that will be important throughout their life. Getting them involved in the family finances is one excellent way to help them gain this understanding. The tips below will help you do so in an age-appropriate way.
Understand and Simplify Your Finances
Before getting the kids involved, you need to know your way around your finances yourself. If you don’t spend a lot of time thinking about the big picture or looking at the little details of where your money is going, you are like many people, but it will be a lot easier to manage things and talk to your kids about money if you are better organized. For example, if you have multiple student loans, you might be eligible for a student loan consolidation with a private lender. A consolidation reduces the risk of a missed payment since you only have to make one each month instead of several. This also can help save on your expenses since you won’t have to worry about fees from those missed payments.
If you are having money troubles, it’s fine to tell your children that you can’t afford certain things. In fact, even if your situation is fine, one of the points of teaching your kids about finances is to help them understand the value of things. However, your children should not be worrying that they won’t have a roof over their head or food to eat. Be honest about financial limitations, but don’t worry them, and keep in mind that children may overhear things or misunderstand conversations. Be positive and encourage them to ask questions.
One of the hardest things for children to conceptualize is that credit cards and checks also represent money. In fact, very young children might assume that these are objects that allow you to bypass having to pay for anything at all. Explain this, and show them what things cost in cash even if you don’t use cash in the store.
A great way to have kids participate in family budgeting without burdening them is by letting them have a say in how entertainment dollars are spent each week or each month. For example, showing a child the difference in going to see a movie in a cinema with popcorn and soda compared to staying home and ordering pizza can give them a sense of opportunity cost. You can also work with them to choose to put some of that money toward a family vacation. Many children aren’t great at delayed gratification, but if you give them a visual to show how the money is adding up and continue to budget for weekly entertainment along the way, this can be a fun and exciting lesson for them.