By Alicia Kellebrew, NFCC Certified Financial Professional
As a part of my job I am given the great honor and privilege to meet and talk to people from all backgrounds and walks of life-in fact that is the thing I love the most about the work I do. Recently, I have had the chance to spend a lot of time with kids that are middle school age (between 12 and 15).
During these interactions I have been asking them if their parents ever talk to them about money. Often times, many hands shoot up in the air which doesn’t surprise me. The interesting part is when I ask them what their parents are saying to them about money. The top three responses are: “Money doesn’t grow on trees!” “Stop spending your money on stupid stuff!” and “You should save some of your money!” While all of these words of wisdom ARE good advice they aren’t really giving kids the “how to” just the “do or don’t do” aspects of money management and finances.
So then I ask if their parents tell or show them how they should manage their money such as how to set up a budget, showing them just how high the cost of living is when you factor in all your bills, or how to avoid getting into too much debt. Almost of them say no so then I ask “Where do people learn to manage their money?” Some of them say they talk about it in some of their classes at school or they attend financial literacy events such as the “Real World Camp” (Be on the lookout for a description of this in one of my future blog posts). Some others say that maybe people figure it out as they go along after they move out on their own for the first time. This is usually when I explain that it is ok to ask others for information such as their parents, siblings, relatives, friends, or even professionals like myself.
The point I am trying to get at is that these kids are extremely smart and they understand that money management is very important but they need a little help to put it all together. Here are a few ways that parents can help fill in the “how to” for their kids:
1. Remember that kids watch and hear the things you say and do with money. For example, they will see if you take the time to balance your checkbook, hear you and your spouse have a discussion before making a big purchase, and pick up on any family money philosophies such as whether you are careful with money or spend it as it comes in.
2. Sit down with your kids and help them plan out how they will allocate their allowance or other money that comes in. This might include talking with them about how much they will save and how they will spend, what they plan to spend and on what. Starting and maintaining an open dialogue for money management as well as other topics in general, will send the message that it is ok to ask questions and will allow you to share your experiences and values with them.
3. Help your kids to learn the difference between needs and wants and let them know that those two categories are not always black and white. While a person may need something, food, clothing, shelter, etc. it doesn’t mean that they shouldn’t consider all their options and make careful decisions. Being able to know the difference and understand that even with needs people have choices will go a long way in helping your kids become financially successful in the future.
4. Remember that it is never too early to talk with your kids about money management. Most parents wait until their kids are in high school or college to have these discussions, if ever. The earlier you talk with them the better as it will help shape their habits as they get older. It is better to learn about financial management while there is still a margin for error that to figure it out after making mistakes that could affect the rest of your life. By talking about money often you send the message that money management and finances are something that they should keep on top of and handle with care.
5. Give them a set amount to cover their own expenses, for example back to school clothes and supplies or entertainment costs, but explain it is the only money they will get for those items for a set amount of time and stick to it. For example, give them $200 to cover all their back to school clothes and supplies and let them know that whatever they buy will have to last them the year. It is amazing how creative kids can be with ways to stretch their money when they know they have limited resources.
6. Give kids a chance to get a glimpse into the inner workings of your family’s household budget. This doesn’t mean you have to disclose all the details (like how much you make) but it will let them see that there are many expenses to keep a roof over their heads, food on the table, and the heat and lights on. Seeing those numbers will help them see that life is expensive and making sure everything is covered takes careful planning.
7. Look for opportunities in your community that offer the chance for you and your child to learn about money management topics. I mentioned the “Real World Camp” above which is a financial literacy event for middle school aged kids put on in Fargo and Bismarck to teach kids about financial topics. You may be able to find other events or resources through your local newspaper or on our Village Financial Resource Center website at www.helpwithmoney.org. Our website also offers tools and resources that can help you and your kids learn more about money management and finances. If you are interested in coming in to discuss your finances with a professional you can set up an appointment by calling us at 1-800-450-4019.