Recently I discovered that Sunday July 22nd is Parent’s Day. I guess Mother’s Day and Father’s Day isn’t enough for us, we need another day. Actually when you think about the role that parents play in raising their kids, we might as well have another day. In fact recent studies indicate that it costs middle income parents about $233,610 to raise a child to the age of 17. I gave my two cents on the cost of being a parent and how to estimate your own costs here. But for me, Parent’s day is for the parents. It serves as a reminder to us parents that we have big responsibilities; financial and social. Parents are still the most influential role model for their kids. Kids are always watching and learning and emulating their parents. It is so subtle that many parents don’t often notice. Many times I’ve caught myself yelling unspeakable things to a football game on the television only to turn away at break in the action and see the disapproving faces of my daughters. Frankly, I was so caught up in the game that I forgot they were there. Banished to the basement again! For me, Parents Day is for parents to remind them of the out-sized role they play in their kid’s development. As a financial coach, I know that parents have the largest influence in how kids will handle their finances in the future. So, for Parent’s Day, here are 5 money lessons you can teach your kids for a healthy financial future.
1. Talk To Your Kids About Money
Kids are already picking up on our money queues so you might as well have an open conversation with them. When you are at the grocery store, talk to them about what you are buying. Why you buy what you buy. Were you choose to shop for food and why. What makes a good purchase and even what made a bad purchase.
2. Share Your Budget With Your Kids
As a financial coach, I’m surprised by how many parents say they don’t show their budget to their kids or even worse they don’t have a budget. Your budget or spending plan is the fundamental tool to managing personal finances. It can also be the foundation of your kids’ financial education if you let it. It is a great prop to speak to your kids about financial decisions you make every day.
3. Start a Savings Account For Kids
It has long been my opinion that without a savings account, there is no workable budget. A savings account allows us to be imperfect and absorb the unforeseen expenses. We are not perfect or immune to life’s surprises and neither are our kids. Start good habits early including a savings account. Talk to your kids about saving half of their income. Birthday money, gifts from family and friends, and allowances. Take them to the bank to let them deposit the money with you. Kids love to see their bank accounts grow and you’ll love seeing their satisfaction!
4. Give Your Kids An Allowance
This oldie but goodie still holds true today. Kids can have a budget right along with you if they have a steady income. They have to make decisions about how to spend or save that money. You then have the opportunity to discuss how to make those decisions based on what you value. Allowances allow kids to begin a budget, a savings and to make decisions about money which is great because then you can talk to them about their money decisions. Coach them up!
5. Encourage Your Kids To Start a Business
Kids like money! Kids are generally fearless and aren’t bogged down by life’s hang ups like us adults. Lemonade stands still work great. Mowing a neighbor’s lawn or raking their leaves. Pet sitting and babysitting are great jobs for kids. My daughters set up a stand where my youngest daughter sold lemonade for $1 and my oldest daughter offered to draw portraits for $5. I told her that I thought her pricing was a little high but at the end of the day, they had made over $60. They were very proud and pointed out that they had made more money than me that day. Let then develop that entrepreneur spirit and it will serve them well.
Enjoy Parent’s Day on Sunday July 22nd and make a conscientious effort to teach your kids money lessons to help them develop healthy money habits.