Money can be such an off-limits topic to discuss with anyone, especially your children. Parents struggle with talking about money with their children for various reasons. In some families, children might be seen as unimportant to have such conversations; it might even be forbidden to discuss finances in general. It can also be out of fear, shame, or perhaps ignorance. Some parents may not even have the knowledge to transfer to their kids on the importance of knowing what to do with their money.
Children should be privy to information regarding savings, money management, and how they can earn money. It is imperative to have money discussions with your kids early on by discussing regular household finances and other small money topics. It is advisable to begin as young as age seven to get familiar with having such conversations. Parents should not wait until they face financial problems and should be open upfront.
Parents need to take their time to have these discussions with their kids because the home is the foundation of learning, and kids pick things up from what they see happening around them. If the parents make the topic of money a non-taboo, and the kids are aware of how the finances work in their family, it would help them in the long run when they become adults handling their own finances.
In today’s world and economy, children must learn to talk about money in order to dispel any fear surrounding the topic. Here are some of the importance of the money talk.
- It teaches the kids financial literacy: Schools don’t teach children how to spend money or savings, so the parents have to teach their children about finances. More so, parents spend more time with their kids, so the responsibility for financial literacy is on them. No other person will teach your kids better than you. They live with you and can be impacted by the financial stress you go through as a parent. Explaining what is going on with the finances would make them feel less anxious than keeping them in the dark.
- It would help the kids learn about savings and budgeting: Kids need to learn about budgeting and saving their money. When parents say no to kids when they want something, they need to explain why and the importance of saving and budgeting their money. They need to know how to spend their money according to the budget they have set and not overspend so that they would not be in financial trouble.
- They need to know the difference between their wants and needs: Kids would always want to get new things, either toys or even snacks. Parents need to educate their kids on how to spend money; this doesn’t mean they should not be allowed to spend money on what they want, but by knowing the difference between their wants and needs, there would be an understanding that even though they want to buy something, it might not be the best time to get it. This would prevent them from just purchasing everything they want, help them to buy necessary things, and save money.
- It would help prevent debt problems: Many people live with debt because they didn’t have the proper financial education. This starts by teaching them as kids the principle of borrowing money. Borrowing money such as loans should not be seen as a grave decision. However, they should also know that it is a responsibility that has to be paid back, sometimes with interest, and if the money is not spent wisely, it could lead them to live with debt.
- It helps kids work for their money: Kids should also be shown how to work for their money at an early age as this would teach them financial responsibility. When the kids carry out specific chores, they can be given money as compensation. This would ensure that they can handle money and have the know-how to spend or save money. While there are different schools of thought about whether kids should be paid for doing chores, our focus here is on understanding how to earn money. Their first encounter with money shouldn’t be when they are away at university.
- It makes them set realistic expectations and goals: Kids always look up to their parents for their wants and needs. This could lead to them having some expectations that don’t match up with their parent’s finances. It is crucial for the parents to inform their kids of their financial status and how it works so that they won’t be disappointed and can set realistic expectations.
Money is universal. It is a necessity in the day-to-day living of man, so parents need to help their kids navigate and prepare for the world by teaching them about finances because they won’t be kids forever. This would help them live a better life and prevent a future of problems that may arise concerning money.
The question may be where to start and how to start. BizVest is a platform that encourages saving with as little as N2,000, and it is an excellent start for you to learn and build financial strength while teaching your kids about money. Visit www.bizvest.co to learn more.