As parents, we tend to focus on education, values, and eating veggies as the important things in our life lessons. However, financial literacy among our younger generations is rapidly declining. A survey conducted by American Consumer Credit Counseling revealed that 91% of Americans believe personal finance should be a required high school course; most likely due to the shocking finding that only 36% of teens know who to balance a checkbook or bank account. With children learning much of their later life habits from watching their parents, it is more important than ever to set an example and actively teach our kids about money.
A Family Affair
Even though sitting down at the table for dinner is, unfortunately, becoming a thing of the past; money management should absolutely be given this kind of attention. The family budget should be a cooperative effort that involves the participation of everyone. Set spending goals and ask kids their input. Do we want a movies category for the budget? If so, how much do we want to limit our spending to? These types of questions help kids understand where money goes each month and just how much things can cost. When kids have an out of sight out of mind view of money they lose the ability to understand how quickly things can get out of hand.
Get kids involved in the tracking of the spending also. They can help collect receipts and balance the spreadsheet or check book. Kids should have a hands on approach to money so they experience the rewards and consequences. Help your kids set up their own budget for their earnings. Allow them to save and spend, offering some guidance but also allowing some independence. If they overspent and can't purchase a desired item, it's ok. Coming into contact with these consequences at an early age while they are yet to hinder a rent payment are important lessons for proper money management as an adult.