From being open about finances to explaining the basics of budgeting, there are plenty of opportunities for parents to teach their children about money and savings. Here are a few ways parents can talk to their kids about finances so they’re ready to handle their own money when the time comes.
Introduce them to simple concepts
Parents can start the conversation by talking to young children about simple financial concepts. This can be as easy as answering kids’ questions about how money works, such as, how do you pay for things? Or, what do the different coins mean? Some parents may give their children play money and use it to demonstrate how to pay bills or count money at the store.
Walk them through a budget, spending, and saving
Parents who include their children in conversations about budgeting and saving can lay the groundwork for a long-term understanding of money. Talking to kids about budgeting can involve showing them the monthly budget, explaining what the family is saving for, and looking for deals or coupons to use at the grocery store. An allowance can be a tool for teaching children about saving, too: giving them a certain amount of money every week is a chance to explain saving for a goal and spending.
Be open about finances
When parents talk openly about finances with their kids, it can plant the seed for a good relationship with money as children grow up. This can show kids that having conversations about money is normal and healthy.
Parents can also talk about how much things cost and why certain things cost more. Kids can start learning about the differences in products and quality, and what’s worth spending a little extra on. They can learn early, for instance, about whether choosing a name-brand item over a generic is worth the value, or why someone would choose a high-quality, handmade item.
Demonstrate good habits
Another way for parents to teach their children about money is to model good financial behavior themselves. This allows children to learn by example and see the real-world implications of financial decisions parents make. Good habits can start with including children in savings discussions, teaching them to repair items instead of buying new ones, and showing them how to work steadily toward financial goals.
Gradually introduce them to more complex concepts
As kids get older and develop more of a grasp on financial matters, parents can start working in more complicated lessons about money, savings, and financial planning. This can be the time to introduce kids to concepts like credit card interest, retirement savings, mortgages, and life insurance policies like whole life insurance. Teaching them how important financial tools and concepts work can lay the groundwork for their own financial decisions as they grow.
Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM) and its subsidiaries in Milwaukee, WI.
Source: Northwestern Mutual