The Best Thing You Can Do To Prepare Children Financially


The longer I’m in the financial planning business, the more I realize how important it is to talk to our children about money. And not just our children, but our grandchildren, our pre-teens, our teens, our college students. It’s important for people of every age to understand the value of money and the reality of spending. Sharing some of the tips we have below can have a huge impact on how your children live later in life. 


I have a diverse group of clients. Some of them are older couples close to retirement, but many of them are also young people, just out of college and starting their careers. When I sit down with new clients, especially my younger clients, I can always tell whose parents talked to them about money and whose didn’t. 

There is some instinctual fear about talking to our children about the intimate and reveal parts of our life, but being open and honest about these topics can have a lasting effect on their futures.

Money and sex are the two most important things we should teach our children to help them be successful adults, but they are also the things we avoid the most.

Teach Your Children The Value Of A Dollar Now So They Have The Build A Strong Perspective

I recently had a young woman call me, she was the daughter of a long-time client I work with. She had just finished college and her parents asked me to help answer some questions she had about her future. The first thing she wanted to know is how much she should ask for her salary in her first job. 

If you don’t understand what your dollar can buy, you don’t know how to value it..png

I said, “That depends. How much money do you need to live on your own?” She said, “I don’t know.”

I asked, “How much do apartments cost in your area?” She said, “I don’t know.”

I asked, “How much would food cost in your area?” She said, “I don’t know.”

This is the sign of a HUGE problem! And it started a decade ago.

If you don’t understand what your dollar can buy, you don’t know how to value it. 

How can we help our children learn the value of the dollar before they get themselves in trouble? It’s not as hard as you think. 

Start to help your kids understand the value of a dollar by being honest and transparent with them about your household finances. Tell them what you make. Tell them what your groceries cost.

A simple practice you can begin today is to show them your receipts at check out when they are with you and help them start to see the actual numbers associated with your quality of life.
 

An Unforgettable Exercise You Need To Do With Your Family This Month

Everyone should try this with their family to really show your children how your expenses work. 

1. Take enough cash out of the bank to demonstrate how much money in hard, dollar bills, you make per month before taxes and bills are taken out.

Put this money on your dining room table and let everyone get a good look. 

AHHH!! I GET SO EXCITED ABOUT THIS!!!!
 

2. Then begin to physically show how your expenses are taken out and where your money is dispersed.

  • Show how much is immediately taken out of your paycheck for taxes. 

  • Show how much is taken out for your health insurance. 

  • Show your grocery bill. 

  • Show your utilities bills. 

  • Show your credit card payments. 

 

Let your children visually see how little money you really get to keep from your paycheck. 

I promise you this will be something they will always remember, and it won't be just a typical talk about learning to budget that goes over their head.

 

Now, Please Throw The Old Rule Book Out The Window

This attitude of being afraid to talk about money, even with our own family members, is deeply ingrained in our culture and I don’t understand why..png

This attitude of being afraid to talk about money, even with our own family members, is deeply ingrained in our culture and I don’t understand why. Why shouldn’t your kids see how much money you make?

Sure, they could brag about it to their friends. That’s a conversation you need to have with them. But, I believe, this risk is worth it for the benefit of your children understanding how much money they truly need to live. 

We need to get rid of these silly rules that say we need to hide money from our children. When you go to the grocery store, show your family the receipt.  If you have debt, show your children your balance and your growing interest.  If you make a mistake in your financial planning, admit it and show them the effect it has on your household. 

Imagine how much your children can learn from these everyday occurrences. It’s invaluable! 

But so many people will shy away from these opportunities, just because of these “rules” they have about how you should act with your children. The problem is it’s crippling their children’s future. 

Forget The Piggy Bank, Try The Green Light Card

This is a product I learned about recently and I think it’s an amazing financial teaching tool for families. The Green Light Card is a debit card you can give to your children and completely control in a while most banks don’t allow. 

Instead of just giving your children an allowance that they can spend wherever and however they want, you can put money on this card and control where they spend their money and how much of it they can spend. 

Our children deserve to be as prepared for the real world after school as possible..png

For example, you can say that you child is allowed to spend $15 per month at Starbucks. Or you can say they are allowed to shop at Old Navy and Target, but not H&M and more expensive places. 

Even more amazing, is you can apply interest to your children’s card so they can be better prepared for the effects interest have on loans they’ll have to take out in the future. 

Our children deserve to be as prepared for the real world after school as possible. Sure, there will be challenges and problems, but teaching them the value of money and investments will help them truly understand what they need to be successful. A big part of this is financial planning.

If you’ve never had a planning session before, you can sign up for a free consultation with us and bring your family with you. It may be scary to show them the deep and darker parts of your life, but learning through you will have a dramatic impact on them in the future. 

Man, I love this topic and watching the next generation begin to prepare for a better quality of life!