Parents want the best for their children. It’s simply a natural instinct. It can also be very easy to say “yes” to financial requests even when your gut tells you to say “no,” especially if you can afford to say “yes.”
Before you know it, your children become teens and are on the cusp of embarking on the next stage of their life, which in many cases is some form of post-secondary education.
While not all children respond the same to the “money conversation” and there are different ways to talk about it, you have to start somewhere. Here’s how you can begin:
CREATE A MONTHLY BUDGET
Sit down on an individual basis and work with them to create a monthly budget. This allows for a dose of reality of actual costs when not subsidized by Mom and Dad. Consider factors such as food, clothing and taxes, etc.
PAY THEM TO SAVE
I know at first this seems a little counter intuitive, but in our household we introduced a matching concept early on. Limits were put in place and matching occurs when savings goals were achieved. The younger they were, the lower the dollar amount. It was more about not spending than the reward. Ultimately, the reward was eliminated and yet surprisingly the savings still happened.
SET THEIR OWN SAVINGS GOALS
Ask each child set their own savings goals. Encourage them to save for something that matters to them and gets them excited about saving. It will also allow them to experience the painful feeling of when that money is all gone, it is gone and the savings begin again. It was surprising to me how often something they thought they wanted in a given moment wasn’t the case even an hour later.
TEACH THEM THE ART OF BEING THRIFTY
Teenagers who handle money responsibly tend to have that responsibility flow into other areas of their life. As a parent, I’ve always believed I owed it to my children to talk and teach them about money. One of the best ways I’ve learned to teach accountability is to give responsibility. Shift the focus: If they spend their money unwisely they aren’t disappointing me – they are disappointing themselves.