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Teaching your children about money is one of the most important things you can do as a parent. Instilling financial literacy at a young age gives them the tools they need to secure long-term wealth for years to come.
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GOBankingRates sat down with Julie Meissner, founder and CEO of Treehouse Wealth Advisors, to discuss the three key financial lessons parents should teach their children.
“It can be difficult for parents to talk about money, especially if they feel like money isn’t really an issue in the family,” Meissner said. “And in today’s digital age, there’s often a disconnect between cold hard cash and teaching kids that just because you have a cash app like Venmo or Zelle or Apple Pay doesn’t mean you’re free of limitations. There is a disconnect.”
Financial literacy becomes an important life skill as they progress from high school to college, she said, and it’s something parents can help their high school students learn without feeling like it’s something else.
“Saving money for a rainy day is one thing, but financial literacy involves learning about more than saving,” Meissner added. “Credit, taxes, banking, investing, etc. are all important parts of financial health. …Parents are responsible for providing high school students with the guidance and support they need to become financially responsible adults. It is our responsibility.”
Here are three things you should teach your kids about money, and tips to help make it less of a hassle.
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money is not taboo
“Money shouldn’t be a taboo topic in the home,” Meissner says.
She said that talking about money regularly can help children become more comfortable talking about money.
“Financial literacy starts with basics like learning how to budget, save, and spend responsibly. For example, if a teenager wants a new prom dress, she’ll buy one. “It could open up a conversation about costs and alternatives such as renting a runway,” she explained. “Decisions about a teenager’s car choice may include discussions about long-term maintenance, replacement parts, or the cost of premium versus regular fuel.”
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responsibility for one’s own finances
According to Meissner, decision making is one of the best ways to teach financial responsibility. “It’s helpful to explore options with them, but it’s even better to leave the spending up to them.”
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This might mean giving your children a set amount of money to spend each month, helping them budget for a new bedroom decoration, or getting them involved in the family’s philanthropy, she said.
“By involving them and holding them accountable for certain aspects of their financial lives, they can learn how to flex their money muscles,” she explained.
For teens, taking on a part-time job is a great way to start earning money for themselves, she said. “This can be a valuable learning experience as they need to budget and manage their finances. It’s also a good way for them to increase their savings, learn about taxes and gain respect for their income. ”
There’s always more to learn
Meissner said there are many great books, websites and articles that can help high school students learn about money. “Providing these resources will ensure your teenager has the information they need to make responsible financial decisions.”
Some great resources recommended by Mr. Meissner include:
“Remember that it’s important to encourage financial responsibility in your children,” she said. This could mean setting up a savings account for them or matching their contributions. “Set it so you don’t forget about it in your daily life, so set a time and frequency to track your finances and celebrate milestones.
“By encouraging financial responsibility, we help children develop healthy financial habits that will last a lifetime.”
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This article originally appeared on GOBankingRates.com: I’m a Financial Advisor: These are 3 financial lessons parents should teach their kids
