Good Finance Starts at Home
Determining how to talk to your kids about money and values can be stressful. But the truth is that there’s never been a better time to teach your kids about money, the importance of savings and the difference between needs and wants. Consider that, even during a global pandemic, kids are likely to ask for things they don’t need, like new toys or clothes, takeout food and more. And while buying some of these things may make it easier to have them home for an extended period (games, puzzles and crafts anyone?), it’s a good time to try to get them to understand the difference between wants and needs.
Wants vs. needs
There truly isn’t a person on earth who won’t be affected by this virus from a personal, economic or other basis. Explain to your kids that you need to pay for your basic needs first. And these are:
That’s not to say that you shouldn’t get them clothes or candy or whatever they ask for, it’s simply a way for them to start to understand that you have choices and responsibilities. And that your needs come first before paying for wants.
Providing an allowance
Another way to help your kids understand the value of money is to give them an allowance. Whether or not you tie the allowance to chores or simply give it as a matter of course, it can be a really good tool.
- Determine how much you are comfortable giving them each week.
- Explain to them what their allowance is meant to pay for—snacks, hanging out with friends, toys and shoes they want, but don’t need, etc.
- If you want to earmark part of the money for savings or charity, let them know that up front and consider letting them select the charity, as it will be more meaningful to them then.
- The next time they ask for something, have them calculate how many weeks it will take them to save for it. This helps them:
- Understand just how expensive it really is
- gain math and budgeting skills
- make better decisions about what is and isn’t worth the money
You’ll invariably discovery that they’re far more willing to spend your money than they are to spend their money. But you don’t need to worry that they will spend it all. While some might, others are quite excited to see their savings grow (a friend of mine has one who saves ALL his spending money so he can always have more than his brothers).
When in doubt
It can be just as easy for kids to get overwhelmed about money decisions as it is for adults. One idea to reduce stress is to tell them to think about it from the perspective of the future using the 10, 10, 10 rule, imagining how they will feel about this decision in 10 minutes, 10 days or 10 weeks (you can do weeks, months or years too). While a child may be more upset in 10 minutes about not getting that ice cream, for example, will they even remember it in 10 days? Probably not. Looking at each time frame, ask them:
- Will the money matter anymore?
- Would you even remember this decision?
- If you didn’t do it, would you wish you had made that choice?
- If you did do it, will you be wondering why you were ever stressed about it?
Gasber Financial is happy to help you teach your kids about savings, investing, responsible use of credit, and more.