If you’re a parent, you don’t need us to tell you that your shoulder enormous responsibility. Bringing a baby into the world and teaching them the skills they need not only to survive, but thrive, is as challenging as it is rewarding. Every parent wants their child to grow up capable of taking care of themselves and those around them. One cornerstone of this skillset is financial responsibility and in order to effectively pass this on to your kids, you need to learn to model it, yourself.
Planning for the Future as a Family
When you have children, your financial priorities change. All of a sudden, you’re responsible not just for keeping yourself fed and housed, but for caring for your family now and into the future. This means fostering financial security and teaching your kids the skills they need to do the same.
Step 1: Teach them Where Money Comes From
For many families, teaching financial responsibility starts and ends with providing their children an allowance. This is great but it overlooks a crucial element: the relationship between time and money.
Kids need to learn that their allowance is not simply plucked from a tree but the result of hours worked in return for a paycheck. You might share this knowledge by setting up informal family economy (dishes for dollars, anyone?) or you might simply talk your children through how you make the spending decisions you do.
You get to choose how you parent, of course, but in doing so you need to ensure indispensable life skills are a part of the curriculum.
Step 2: Let Them Be Their Own Guide
The beauty of being a child is that you’re free to make mistakes. Talking to your children about financial responsibility is great but it’s no match for hard lessons. Let you kid’s desires guide their spending decisions and then, crucially, allow them to learn from their oversights.
Did they spend three months of allowance on a life-sized Elsa doll only to lose interest a week after making the purchase? Shucks… should’ve thought that through.
Did they lose their room key at summer camp and are now begging you to cover the $200 fee? Looks like they’ll be doing dishes for quite some time.
Lessons learned the hard way are important to ensuring they need not suffer the real sorts of consequences that come when they gain adult responsibilities.
Step 3: Model Responsible Planning
It’s easy to talk to kids about the need to save should they wish to make a big purchase; it’s harder to talk to them about the need to plan for long-term well-being.
While a ten-year-old need not being thinking about estate planning this all changes when adolescence begins. Every adult, young or old, needs to have an estate plan which means that when your children reach the age of majority, they need to execute certain essential documents.
The best way to inform them of this need and teach about the importance of planning for the future is to model appropriate behavior.
Talk to them about your own estate plan. Include them in the decision-making process (where possible and appropriate). Explain that an estate is more than a Will but also a matter of advance directives and financial planning. Address the importance of periodic updates, share changes as you make them and encourage them to do the same.
Financial security, like so many other aspects of well-being, is a life-long practice and the sooner children engage with this idea, the more likely they will find success.
For more on fostering financial literacy and communicating the importance of estate planning, do not hesitate to contact the Polaris Law Group either by calling or using the contact form on our webpage.