The Right Way to Talk to Your Kids About Money

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

Although children will develop their own feelings about money as they get older and start becoming financially responsible for themselves, a major factor that goes into their view on the matter is how their parents talk to them about money when they're young - do their parents talk positively or negatively about it as they're growing up?

Take a moment to think about your own experience - what feelings did you develop when you were young based on how you heard your parents speak about financial matters? Was money something that caused feelings of anxiety or did you always feel ok? If you want to ensure that your children grow up feeling comfortable with money and watch them make smart decisions as they get older, here are a few things you should do:

Walk them through a budget. 
Whether it's your budget or a budget you set up for them, it's important that children understand both the importance of a budget and how to stick to one. A great place to start would be to give them an allowance each week and work with them to keep track of how much they make, as well as what they can afford to do with it - savings included.

Emphasize goal-setting.
As much as we all wish it would, money doesn't grow on trees, and thus, there are going to be a lot of times where we have to wait and save for things that we want. If you have a child at home that wants the latest gadget or hot ticket item, discuss the overall cost with them and ask that they purchase it on their own - if they don't have enough money at the time, this is where you work with them to set a goal for themselves and discuss how they can achieve it (for example: tucking away X amount of dollars from each week's allowance in order to be able to purchase the item by X date).

Explain what it means to borrow.
It's extremely important for children to have a good grasp on borrowing so that they aren't surprised when they hear that they have to pay back debts one day. A good way to explain this to them is to use a real life example so that they can visualize what it means - for example, if there is something your child wants immediately but they do not have the funds for it, lend them what they need to cover the cost. But, don't do so until you explain that your child has to pay you back, and work with them to set up a schedule/plan for how this will be done.

Most importantly, the biggest thing to remember is that you should be open about talking about money. Even if you're experiencing a stressful situation, you don't necessarily want to hide things - if your child asks, be willing to communicate, as it is all a part of the learning experience for them.

Here at American Investment Planners LLC, we recognize how important it is for children to learn about money early, which is one reason why we want to be your whole family's financial planner! Let us help you help your family - give us a call at (516) 932-5130 or email info@americaninvestmentplanners.com to set up an appointment with yourself, your children, and an advisor today.