Conversations to Help Your Kids Financially Flourish

Talking to our children about money can seem tricky. Many of us grew up in households where we didn’t talk about finances. In reality, speaking to your children about finances is crucial towards setting them up for success. Did you know by age three, children can begin grasping basic money concepts? And by the time they’re seven, many habits start to set. By starting the conversation early, you can help shape how they earn, save and spend in the years to come. Otherwise, they may develop routines that will negatively impact their financial health. At Heights Finance, we’re big believers in teaching these important lessons early. Let’s take a look at ways to influence our kids on money matters from the beginning.

Speak Freely

The first thing you must do is make sure your children can communicate honestly about money. Finances are a huge part of life, so it’s essential to be open and affirming. Include them in discussions about family finances, such as budgeting for vacations. Even if these conversations aren’t serious, they’ll expose your children to the importance of finances. You can also set aside time once a month for a family money talk. That way, everyone can contribute to the family’s financial goals.

Vocalize Financial Responsibility

Many parents give their children an allowance, but how many use “allowance” as an opportunity to teach financial accountability? When you’re ready to set up an allowance, determine ways that money will be earned. Whether it’s for good grades or doing certain chores, make sure you tell your children that they make money based on their hard work and efforts. This will teach them to appreciate their allowance and the value of a dollar.

Once you’ve decided an appropriate allowance for your kids, open bank accounts for them. Use these accounts to pay and help them keep track of their finances. Once a week, log in to your children’s accounts and go over their balances with them, including what they earned. Praise them for their hard work and let them see you deposit their allowance in their accounts.

Speak the Language of Saving

After opening bank accounts for your children, you can also teach them about saving. Encourage them to store away at least half of their allowance each month. If they do, tell them you’ll add an additional amount to their account as a reward. Explain that when you put money in a savings account, their funds will grow more because of something called interest. By discussing the importance of savings and setting goals, you’ll help them build lifelong financial skills.

Chat About College

Learning about saving only scratches the surface on things they’ll have to save for in life. Some of the biggest financial considerations they’ll have to make will be about their education and professional goals. With the cost of college ever-increasing, it’s crucial to begin saving for your child early. Let them be part of this. It doesn’t matter if they decide not to attend college when they’re older. What matters is instilling an appreciation for the cost and value of education. So talk to them about what they want to do when they grow up and what that will mean financially. If they want to be a rocket scientist, great! Give them options about where they can do to achieve those dreams. Discuss things like loans and scholarships as your children get older.

Converse on Credit Cards

When your children are younger, you don’t need to explain too much about credit cards. However, if they see you pay with a credit card, it’s a good idea to provide clarity into that action. Explain that you are still spending money and that you pay a bill at the end of every month. As your children grow older, teach them how to use a credit card responsibly so they can build good credit and avoid debt. The best way to do this is by letting them have their own credit card when they hit 18. Sit down with your kid when they open the account. Make sure the credit card is linked to your child’s checking account and set to auto-pay each billing cycle. Once the credit card is set up, advise them to make a few modest purchases each month, such as a tank of gas or a meal out. Remind your child to keep enough money in their checking to cover the charges. Explain that after a few years of using the card and paying it off automatically, they’ll build a history of positive credit. This advice will set a solid financial foundation when they’re ready to take out loans, rent an apartment, lease a car and more.

Keep the Conversation Going with Heights Finance

When it comes to setting your kids up for financial success, communication is key. There’s nothing to be afraid of when it comes to discussing money with your children. You may actually be surprised how interested they may become in these topics. If you ever have any questions of your own, Heights Finance is here for you. Our friendly and knowledgeable team members are always ready and happy to assist. So don’t hesitate. Stop by your friendly local branch today and don’t forget to bring the kids!