Becoming an adult (at least in age) will quickly teach you one thing, if nothing else: living can be expensive. What seemed like a huge investment of cash as a kid is suddenly just a fraction of your rent and other bills. It’s a difficult transition time if you’re not prepared for it; the question is, how can families help their kids prepare for their financial future?
Look for advice on parenting online, and you’ll quickly find any number of sources who will tell you all sorts of contradictory things. This is especially true when it comes to kids and teaching them how to handle money: should they be given an allowance? Should they have to earn it? How can you help kids learn whether they can afford expenses, and how to budget and save up when they can’t? I was curious what other people thought, and only a few minutes of searching showed me that people think pretty much everything imaginable about this topic. There was, however, one thing that was fairly consistent: parents need to learn to be open with their children about family finances.
This might be one of the most important things that we can do to help children learn from our examples. If you don’t have money in your budget for fast food that day, it helps to be upfront about it and tell the kids. If they want a toy or game that you can’t pay for right then (or don’t want to, of course), help them learn about saving money for future purchases.
Children probably don’t assume that you have unlimited sources of money, but if you act like you do they won’t learn as quickly how to deal with their own finances. Seeing their parents’ care with financial things, kids will pay more attention to how money is spent: what mom and dad buy, what they don’t, and when they do (This has the additional bonus of being an incentive for parents to stick to a reasonable budget!). It’s much better to be able to learn from others’ actions than to have to struggle through things for ourselves. Kids will still need to develop their own habits, of course, and like I mentioned there are plenty of online sources that have innumerable suggestions about that, but kids will have a good place to start from the things they discuss and observe with their parents. Like so many other things, learning to budget and save starts in the home.
—Sam Watson, Editor, Stance