As the new year rolls out, it’s a good idea to start talking to your kids about money. It’s never too early to have a conversation about financial security and your kids should learn their lessons now while there’s still something of a safety net. Below are three lessons to teach your children during 2017.
It’s never a bad time to start talking to children about keeping track of their money. If you have very young children, this can be as easy as teaching them coin and denomination values and having them keep track of a piggy bank. Older children should be taught how to balance a checkbook and the process of keeping a budget. Those who are able to keep track of their earnings and costs are better able to make decisions when it comes to future spending and better able to make informed financial choices.
Spending only one what makes can be difficult when you are young, especially if you always have a parental safety net on which to rely. This year, start teaching your kids about living and spending within their means. Teach them that saving money will help them to deal with problems in the future, while spending too much today can set them up for failures when there are emergencies. Make your children go grocery shopping with a limited budget so they can see the difference between buying what they want and buying what they need. This basic lesson will come in hand for the rest of their lives.
The Meaning and Value of Debt
It’s also a good idea to start teaching older children about debt. While the lesson above stresses living within one’s means, it’s important to talk to teenagers about the debts they may be carrying once they go to college. Stress the difference between good debt and bad debt, as well as the value of paying off what you owe in a timely manner. This is a good time to talk about things like interest rates and penalty payments, so be prepared to spend a fair bit of time getting into some basic financial matters.
Children should know how to track their money, how to live within their means and the methods of tracking and taking care of debt. These lessons will be valuable during their adult lives and help them plan out their future. The earlier they learn these lessons, the better – good financial literacy is an important life skill.
David Milberg is a financial analyst in NYC with nearly 3 decades of experience in the finance industry. He is a long-time owner of Milberg Factors, a factoring and finance company with locations in New York, California, and North Carolina.