Can you visualize having your teenager balance your checking account?
Perhaps, that’s a bit of an extreme example. However, as a general rule, getting your kids involved in family finances is a good idea.
It’s even more important that kids have a good understanding of family finances given the current economic recession and the realities of a world with Coronavirus. More than ever, our kids need to be able to make smart decisions about their finances.
Below, learn 3 reasons why your kids should be involved in family finances:
Some parents shy away from involving kids in “money issues.” They argue that children shouldn’t have to worry about money.
However, can you imagine children learning about how to manage their own finances for the first time at age 18? Given the high number of young people who have credit card debt, many kids are left to their own devices. Bad debt and poor money management are exactly what happens when kids haven’t had the chance to learn about finances and how credit cards work.
Now, you don’t have to tell your kids about every last expense and debt that you’re paying. However, it’s good to involve them in a basic understanding of the family budget. For example, you might say “Our budget for eating take-out this month is $100. We already spent $50. So, how would you like to spend the remaining $50? We could order pizza twice, or a fancier meal one time.”
Another important lesson might be about credit cards. Without scaring your kids, you might mention if you’ve accumulated debt, and what you’re doing differently to pay it off. Or, you might explain the best way to use credit cards (only use what you already have in the bank) and explain how you avoid over-using your credit cards.
You might also involve your children in your charitable giving and ask them to help you choose which organization to give to. This helps children learn about the 4 strategies for using money.
Want to learn more? Read Saltarín with your kids! This book explores 4 important strategies for managing and using money that every child should learn.
Psychologist Adam Grant suggests that one thing parents fail to do is “ ...give them [our kids] the chance then to build their own resilience by helping us solve problems.”
We can help our kids feel like they’re contributing by involving them in basic budget issues. For example, if Dad’s hours have been cut back due to COVID-19, what things can we do as a household to lower spending? Or, if your child wants to join a sports team, how could they help earn the money for their uniform?
Kids can later use this information when they are independent and face similar situations. For example, if their hours are cut back at their part-time job, they know that they need to reduce spending or find other sources of income.
Delayed gratification and impulse control are important lessons for children to learn. Basically, delayed gratification is your child’s ability to wait for a positive outcome. A famous experiment with marshmallows has often been used to test children’s ability to wait. They are offered 1 marshmallow that they can eat right away. However, if they wait for a researcher to return, and don’t eat the marshmallow, they’ll be given 2 marshmallows.
Saving money for a vacation or a favorite toy requires us to practice delayed gratification. If we spend our pocket money now, we won’t get that greater reward later. So, you can involve your child in saving challenges as a family. This way, they can learn that working hard and not giving in to every impulse to spend has great long-term benefits.
Do you involve your kids in family finances? If so, how? Tell me all about it. Let’s connect on social media! Connect with Elaine King on Facebook, Youtube, Instagram and Twitter, plus, get free tips!
Elaine King offers workshops for kids, adults, and families! Get in touch with her to organize your virtual session today.