Here’s how to raise financially health kids — and mistakes to avoid
You want your kids to have a healthy financial life, yet knowing how to help make that happen may leave you stumped.
This can be difficult if your money problems are personal. However, it is important to teach them early.
“There’s a lot of misinformation out there that they will be exposed to later,” said Sheila Bair, former chair of the Federal Deposit Insurance Corporation, an independent agency that insures U.S. banks.
A number of her books are children’s, which focus on lessons in money. Her latest were released this week — “Billy the Borrowing Blue-Footed Booby” and “Princess Persephone Loses the Castle.”
This is how you can help your children get on the right path and what you need to be careful of.
Be aware of your behavior
Children learn from observing their parents. Yet many people are setting bad examples when it comes to money, said Bair, a member of the CNBC Invest in You Financial Wellness Council.
She said that many adults don’t manage their money well.
You can’t buy things that are out of your reach or make impulse purchases while you’re with your children. They will see this.
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If you are stressed over money, acknowledge it. Melanie Mortimer of the Securities Industry and Financial Markets Association Foundation said that stress can prevent you from teaching healthy habits to your children. This organization serves as the financial educator and investor arm of SIFMA. It is a trade association that includes banks, asset managers, and securities firms.
It is one of many barriers that prevents us from becoming better financially educated in the country, she stated.
Being comfortable is essential. It’s important that you don’t associate the responsibility for your debts and bills with the obligation to educate your child.
Talking with your kids about money is important, but how you do it is also crucial.
Bair advised that you should not be very didactic and avoid finger-wagging.
Have conversations at the table about topics like budgeting and savings. Keep it simple with younger children. However, as their age increases, they will be able to start exploring more advanced concepts such as earning an allowance and making money.
Use real life-examples
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When you go shopping, let them see you pay for items and even comparison shop.
Explain how your credit card works if you have one.
Bair explained that although it may not seem like mom or dad are actually spending money on that credit card, they have their hard earned cash behind the card and that will pay for what was purchased.
Introduce investing concepts
By the age of 9, children are usually beginning to use fractions and percentages. Mortimer stated that this is a great time to teach them investing.
The SIFMA Foundation’s stock market game is used in schools and through community organizations, and is also available to individuals on its website.