In a recent article we talked about the importance of teaching your children the value of delayed gratification in regards to money. Introducing a sound financial principle to your children is crucial, but it should be the first step of many, not a one-time scenario.
Talking about finances to your kids makes them more likely to be knowledgeable about taxes, credit, managing money, and other basic financial principles. And best of all, this is a topic most kids want to talk about. In fact, according to a study by JuiorAchievement.org, 84% of teens want their parents to talk to them about money. Unfortunately, 74% of parents say they are reluctant to do so.
Many parents miss out on the opportunity to build a solid financial foundation with their children—especially if the child is a girl. Girls who participated in the study were less likely to have parents who talked to them about saving money and managing finances. Only 24% of girls said their parents talked to them about managing money compared to 40% of boys. Having good financial principles is not a gender-specific quality. Talk to your daughter about money the same way you’d talk to your son. Women need financial wisdom as much as men.
And when you talk to your kids about finances, be honest with them. According to Forbes, 28% of parents say they’ve lied to their kids about being able to afford something. When your child asks you for something and you don’t want to buy it, don’t make “we can’t afford it” your default answer. Explain to kids why it may not be a good idea to make that purchase. Doing this will teach your children the process in making sound financial decisions that will help them as they get older.
Lastly, remember to practice what you preach. According to the survey, 89% of parents believe their children learn their financial behaviors from them, so make sure your own financial habits reinforce what you teach your children.
Talking to your kids about finances is a big step, so how do you get started? Incorporate your children into everyday activities. Take them grocery shopping with you. Discuss your budget. Tell them why you buy some items and why you don’t buy others. You can also help them open a savings account or even do something as simple as playing a game of Monopoly.
Talking with your kids about money can open up financial conversations that make you more likely to contribute to savings, follow a budget and save for retirement*, so don’t let hesitation stop you from engaging your children.
Having family discussions about money is a game everybody wins—and unlike Monopoly, everyone involved still gets along after it’s over.
*Tip: One way to save for retirement is through AG Loan Fund Investment Certificates. These fixed-income investments offer a competitive rate of return and help ministries across the country while they earn interest.