Published by Ryan Cooley
Anyone who has kids knows that there never seems to be enough time to intentionally teach your children all they need to know to be a successful adult. How do you consistently instill the values of a strong work ethic, kindness, and respect, not to mention time management and how to take care of your health amid busy days and other responsibilities?
Thankfully there are a lot of things kids will learn on their own, at school, or just through daily life experiences. But one thing you shouldn’t leave to chance is teaching them about finances. Financial literacy is a skill that could make or break your child’s success in their adult years. If you don’t know where to start, here are some tips!
1. Set An Example
If you’ve spent any amount of time with children, you know that more is caught than taught. If you want your kids to grasp the importance of handling money wisely, you need to let them watch you make financial decisions and model what you want them to learn.
The annual T Rowe Price Parents, Kids & Money survey shows that kids tend to pick up the good and bad financial habits of their parents. (1) If you spend money recklessly without a clear purpose, your kids will see that. If you rely on credit cards to cover expenses or argue with your spouse about finances, they’ll accept that behavior as the norm. Your actions set a precedent, so be intentional about how you model money management to your kids and let their watchful eyes be a motivator for you to change the negative financial habits you may have picked up.
2. Weave Conversations Into Your Daily Life
Since many areas of personal finance aren’t visible, sometimes a silent model isn’t quite enough. That’s why it’s vital to start the money conversation now, because talking to your kids about money regularly leads to kids who are more financially literate. (2) This doesn’t have to be a long drawn-out discussion. Just let them in on your thinking and decisions as you go about life. So when you’re at the grocery store, explain why you buy the off-brand cereal instead of the name brand. When you’re at the bank, explain why the bank keeps your money and you only take what you need from the ATM. These real-world scenarios help cement the whys and hows of money in your child’s mind.
And if you set the precedent of being open about finances now, while they are young, they are far more likely to keep coming to you for advice or assistance when they get older.
3. Give Them Opportunities
For financial understanding to truly sink in, you need to let your kids experience their own successes and failures. On a practical level, give your 5-year-old some money to buy something at the store so they learn the value of different items and realize that to obtain something (a toy), they have to exchange it with something else (money). Try letting your 10-year-old figure out the cost of the new video game he wants, plus tax, and help him save up his allowance for it. Let your teenager buy her back-to-school clothes on her own with a set amount of money.
As your child earns money, have them split it between three jars: one for saving, one for spending, and one for sharing. When the savings jar fills up, take your child to the bank to open up an account. Let them take ownership of their money and give them opportunities to make mistakes while the stakes are still low.
We Are Here To Help
At the end of the day, you want what’s best for your child. But whether it’s implementing an allowance, putting money aside for college, or saving for other major milestones in your child’s life, it’s hard to know if you’re doing an adequate job. Most parents say they would take advantage of resources to help them teach their kids about money if they were available. (3)
We’d love for you to think of Jacob William Advisory as that resource. To talk more about how we can help you set your kids up for success and save for your family’s future, contact our office today at 410-821-6724 or [email protected].
Ryan Cooley is an associate Wealth Advisor at Jacob William Advisory, a wealth management firm whose sole mission is to serve their clients’ needs beyond their expectations. Ryan has a military background as a U.S. Army Infantryman, and he applies the values and character traits he learned through his experience to his role as a financial advisor. To this day, Ryan is passionate about veterans’ issues and holds a seat on the Advisory Board for Operation Second Chance and is a lifetime member of the Disabled American Veterans organization. Ryan obtained his bachelor’s degree in economics and his MBA from the University of Maryland. Outside of the office, Ryan enjoys spending time with his wife, Germaine, and their two wonderful children. He currently resides in Urbana, Maryland, and loves to fish, hunt, cook, watch Maryland Terrapin sports, and cheer his son and daughter on in all of their activities. To learn more about Ryan, connect with him on LinkedIn.