This is a partnered post.
The thought of introducing your kids to the often stressful and sometimes worrying world of money is one that many parents aren’t comfortable with. But soon, children become teenagers, and teenagers grow up to start making some adult choices. Some of them with zero preparation at all. Early mistakes with money can grow to become anchors that weigh them down for years and habits that last a lifetime. We need to figure out when to have the money talk.
The fun part, for many people. The idea of spending is something we introduce our kids to early, but we don’t necessarily introduce them to the idea of spending in a way that saves money. Be a little more thrifty and frugal in your own spending and they’re likely to pick it up. When it comes time for them to look at big purchases they want to make, like a new laptop or mobile device or new clothes, help them navigate things like sales and online stores to find the best price. The sooner they learn to be picky with how they spend, the better they will get at it.
Whether it’s a credit card or an overdraft on a bank account, most young people get their first experience of credit when going to college or after they graduate. Many get into these agreements not fully understanding them and treat their lines of credit like â€œfree moneyâ€ they can dip into whenever they want. Learnvest.com has some great ways to have real discussions about credit with your kids, particularly in helping them understand that they’re going to have to pay it back. Getting the message in their head that taking out credit they can’t afford to pay back with their current income can help them avoid some pretty terrible decisions. There’s a real crisis of college students getting into overdrafts without any additional income, finding their credit score damaged for years and spending months after with serious debt to consider.
Which brings us nicely to the next point. Debt exists and it is likely to become a part of just about everyone’s life at some point. Helping your kids avoid it is all well and good. Teaching them debt reduction strategies, such as learning to negotiate with creditors and using sites like consolidate.loan to make it much more manageable and to get control of over terms of payment is better. You might have to play the role of Bank of Mom to help them sometimes, but it can be a safer learning environment, paying you back rather than creditors that can do long-term harm.
Introducing kids to the concept of saving early is perhaps one of the easiest lessons to teach them. Giving them pocket money towards a vacation or a big purchase will teach them the importance of setting goals and contributing to them piece by piece. But from then, it’s about helping them find the right savings goals. As soon as they’re in the big bad world of work, it makes sense for young people to start saving for retirement, for instance, or to put together an emergency fund they can use if life takes a turn that ends up costing money.
While they’re still under your roof, it’s worth noting every time your kid crosses one financial milestone or another. Getting their first job. Saving for their first trip with their friends. Opening their first bank account. If they’re unprepared for not only the rewards but the responsibility that comes with these milestones, they might unknowingly become very financially irresponsible.