In today’s environment, clients routinely ask, when should I begin teaching my children about money? My answer is, “Why wait?!” The time to talk with your kids about money is right now. Of course, many procrastinate on this important subject because they’re not sure what to teach at what age…amongst other uncertainties.  Let me help you get started teaching financial concepts to children.

First, a personal anecdote: kudos to my own parents for implementing the 50/40/10 rule from the time I can remember. 50% of my money goes into the bank. 40% was mine to spend, and 10% went to our church. It didn’t matter if it was my allowance or money I earned by mowing lawns, shoveling driveways, babysitting, newspaper delivery, etc.  This system was ingrained in me as early as I can recall having money of my own.  Additionally, they’d talk with me about buying on impulse versus truly evaluating what you want and saving for those goals when applicable.  It’s probably not a huge surprise that I ended up being a Wealth Strategist.

In any case, here are a few jump-start concepts you can use to teach financial concepts to the youngsters in your life.

• Starting early with kids gives them a better shot.  Instilling good habits now is much easier than breaking bad habits later. Talk to them about healthy spending habits and their rewards, as well as bad habits and the potential consequences.
• When a child expresses a desire for something, it’s Lesson Time!  Explain that wants have value and this is how their price is determined. If they earn an allowance, help them compute how many weeks or which chores they would need to complete to buy it.
• Help them further understand the concept of earning money.  Once you’ve lost all of your baby teeth, money is earned by working.  Explain why you work and how your earnings contribute to the household. Which things are needs and which things are wants? Discuss with your child the various ways they can make money.
• A certain universal trait many children have is that they are in absorption mode far more often than they are in “active listening mode”. They often like new, shiny objects that grab their attention. Remember the fidget spinner they wanted so badly?  Thrown in the donation pile after a few spins. Explain how novelty has a tendency to fade quickly and provide an example for them to observe.
• Patiently give your child the opportunity to learn from their mistakes.  Sometimes a poor purchase decision can teach a powerful lesson.  Caveat: be careful not to allow bad habits to take hold!

Money, debt, credit, and fiscal responsibility concepts should not be taboo but encouraged age-appropriate topics of discussion.  Answer their questions openly so they’ll feel comfortable asking for your input as they grow up and the questions become more complex.  The more they understand, the more comfortable they’ll be when it’s time to make their own important purchase decisions.

Talk about debt. Talk about fiscal responsibilities. Talk about healthy spending habits. Constantly be on the lookout for teaching moments.

Should you have additional questions about training your children, or wish to engage in a workshop, let us know.

By Anthony C. Williams, CWS, ChFC, MRFC, CLU | Investment Advisor Representative | President & Founding Partner of Mosaic Financial Associates & Orthopaedist Advisory Group | Securities and advisory services offered through Cetera Advisors LLC, Member FINRA/SIPC, a broker/dealer and a Registered Investment Advisor.  Cetera is under separate ownership from any other named entity.