WASHINGTON — It’s never too early to start talking to your kids about money — how to save it, spend it, invest it and donate it.
Attitudes surrounding money are formed very early on by the signals and the messages that we get from our parents, said Dawn Doebler, senior wealth advisor and founder of Her Wealth.
“We don’t want to send the message that money is a taboo topic. You want your kids to be curious about money and how it can be used to help them reach their goals,” she added.
Not sure where to start? Doebler shares some of her favorite kid-friendly lessons in finance.
Get your finances in order
The best way to teach your children about responsible money habits is to practice them yourself.
“If you’re exhibiting good money skills and developing those, understanding your finances, being responsible, that’s a great way to begin with your children, simply by getting your own finances in order,” Doebler said.
Don’t save bill-paying and budgeting for when the kids are asleep. Do it out in the open, and if they have questions, be prepared to answer.
Let your children learn about money through experience. The next time you are headed to the grocery store, take them with you. Give them your list, your budget, and let them help make the decisions about what goes in your cart.
For older kids with stronger math skills: The next time you are out to dinner as a family, have them look through the bill. Make sure all of the items ordered are on the bill and that everything adds up correctly. You can even have them help you figure out the tip.
Doebler says when doing these exercises with your kids, it’s always a good idea to use cash.
“One of the things we’re finding now is that spending in younger children is kind of decoupling from cash because everyone’s using credit cards and paying online, so they don’t really necessarily understand the connection between money and spending because they don’t see it the way I did when I was younger,” she said.
Talk about saving
If your children get a check from grandma for their birthdays, encourage them to put some of that money away for later.
“Or if they don’t have their own money, talk about what you’re doing to save for the future — maybe for college education or a family vacation and how exactly you’re doing that,” Doebler said.
For older kids: Go through your bills and their paychecks
Doebler said if you have college-aged kids, take out your electric bill and walk through it with them.
“Because as they get closer to having their own apartment, they really need to understand that and many of them don’t have any idea how expensive it is to have a household and what the expenses are in order to support that,” Doebler said.
And whether it’s a summer job or a full-time job, going through deductions on your child’s paychecks to make sure the proper amount is being withheld is always a worthwhile lesson.
“Everyone is always shocked by the amount that is deducted from the paycheck,” Doebler said.
Allowance? Let your kids decide how to spend it
If your child gets an allowance, make sure you explain that once it’s spent, that’s it. Then, let them decide how to spend it — whether it’s on snacks at the pool, movies with friends or clothing.
“Because what we really want to do is teach them decision making about money,” said Doebler, who went through this same lesson with her own children.
“What I realized was they really need to understand what’s important to them, to budget their money, learn how to make decisions, and it’s not really my decision to make. When they grow up, they’ll have their own interests and it’s a great way to teach them about budgeting, saving and if they spend too much up front, they learn what it feel like to not have anything left at the end of the month.”
Intro to investing and giving
Gifting your child some of your stock is a good way to get them interested in investing. They can keep track of it as money is gained and lost. Another idea is to gift them a certain amount of money and have them research various stock options and come up with a plan on how they would like to invest it.
If your child has a summer job, help them open a Roth IRA.
“That gives them a great start on an investment account, it teaches them about how to select investments, how to watch them, they have the experience of the market being up and down, and over time, really substantial opportunity for growth because that grows tax-free,” Doebler said.
And of course, if your family is fortunate, discuss charitable giving with your children, and ask for their thoughts on where donations should go.