In our monthly column from Karen Minogue, Waccamaw Wisdom, we’ll emphasize the importance of setting a good financial example for your children and give tips on how to do so. Topic suggestions welcome at email@example.com.
How to Teach Children about Money
“Of all the lessons you teach your children, being smart with money is among the most important. By taking the time now to discuss and model good financial behavior, you can help them become financially fit adults.”
You are your child’s first teacher. Take advantage of teachable moments as they arise and throughout your child’s formative years into adulthood to share your own financial values.
According to Laura Thurow, Director of Research, Products & Services at Baird’s Private Wealth Management (PWM) Group, here’s a timetable for giving advice to kids of varying ages:
THE EARLY YEARS.
While most preteens will grasp what money does, they may not know where it comes from or how it accumulates. A piggy bank is a good place to start, where young children can see firsthand that the more you put in, the more it will grow. Now is also a good time to model smart financial behavior: If you demonstrate you’re mindful about how you spend money, your children will more likely be thoughtful with their own spending later.
THE TEENAGE YEARS.
As children get older, they may be able to earn either own money through chores or neighborhood gigs like babysitting. This could be a great opportunity to encourage thoughtful decision-making by having them pay for their own non-necessities and matching any funds they deposit into savings 0r donate to charity. For older kids working their first “real” jobs, that first paycheck could be an ideal time to discuss taxes, budgeting, saving – even investing and IRs.
THE COLLEGE YEARS.
College offers many teens their first taste of independence – and their first experience with the real-world consequences of their spending choices. At this stage, financial discipline becomes a must. Setting credit card limits can keep teenagers out of trouble while they learn to balance debt with other financial priorities – and build their credit.
AS YOUNG ADULTS.
Even as young adults, your children may rely on you for financial advice on taking out an auto loan or buying their first home. This could be a great opportunity to reinforce your lessons on budgeting and building a credit history. You might also teach them the advantages of saving for retirement early and applying for employer retirement benefits.
Of all the lessons you teach your children, being smart with money is among the most important. By taking the time now to discuss and model good financial behavior, you can help them become financially fit adults.
Source: Teaching Kids to be Financially Fit by Laura Thurow, Director of PWM Research, Products & Services, Baird Digest www.bairddigest.com. 7.
One of the most rewarding things one can do is to give back. Including charitable giving as part of a well thought out financial plan is not only emotionally gratifying – it can reduce estate taxes too. Waccamaw Community Foundation is your first resource and partner in all things charitable. Karen Minogue is poised to help you set up a charitable fund in as little as one day to support the causes you care about. Call Karen at 843-357-4483 or e-mail her at Karenm@mywcf.org to find out more.