Today’s Practical Planning Tip we will discuss Money Advice Every Parent Should Give Their Children.
Clients often ask me for advice on the best way to educate their children about money. Properly educating one’s kids about personal finance is extremely important and can change the trajectory of their life. Unfortunately, most schools and even colleges don’t have a financial planning curriculum. The burden of teaching financial literacy is solely on parents.
Many parents feel overwhelmed when it comes to this task. This may be because they don’t have expertise in this area or because they’ve made poor money decisions themselves. Fortunately, understanding just a few concepts can make all the difference. Over the next few days I will touch on these key areas.
Appreciation for money: A healthy relationship with money should start at a young age. While teaching budgeting, cash flow management and savings are important skills, few elementary or high school students have the patience to sit down and discuss any of those topics. It’s wiser to start with simply instilling an appreciation for the things one has: an iPhone, computer, car, staying at a nice hotel, going away for holidays, simply going out to a nice meal, or any other luxury that may be in their lives. Teaching kids to be grateful through casual discussion reinforces a positive attitude towards money and will serve as a springboard for other finance-related conversations. It will also open the child’s eyes to families that may not be as fortunate. That awareness, and possible lessons on charity, is helpful beyond the world of personal finance. As I tell my clients, financial planning is not only about the accumulation of wealth, it is also about the transmission of values to the next generation.