How do you tell your overindulged children that the money train has left the station? A lot of families are struggling with this question these days. After years of saying “yes”, for many families, it’s time to say “no”.
When you hide your financial worries from your children you are doing them a disservice. You may not want to worry them but your kids will know that something is wrong. Children have an amazing ability to blame themselves for everything. They are already worried and, if you don’t talk to them, it will be up to them to figure out what’s going on.
Unless your children are very young there is no reason you can’t say to them that your financial situation has changed. Formulate a plan for how everyone is going to work together and deal with the situation. Avoid a panicky, “sky is falling” talk. Creating a team atmosphere brings families closer together. Instead of keeping the children in the dark, everyone is working for the betterment of the family.
In an age appropriate way you can involve your children with money management as soon as they understand math. Younger children can start with the grocery store. Give them a budget and allow them to choose their own cereal or after school snacks. The older the child, the larger the budget and the longer the list. As a bonus, if you work it right, you can have your teenagers doing all the grocery shopping!
Use this opportunity to begin teaching your children the difference between needs and wants. Make your children earn their allowance and, when it is spent, it is spent. In this way, your children are being taught the value of money and how to manage it. It is never too late to talk to your kids about money. Just because you’ve always done things one way, don’t be afraid to change. You can acknowledge to your children that yes, you did always used to let them have a new whatever, whenever but, sorry, you can no longer do that .
Rest assured that even if you choose not to talk to your children about money everything you do with money teaches your children something. If you spend money that you do not have and buy things that you can not afford then that is the lesson you will teach them.
A lot of people are dealing with this issue right now because of the downturn in the economy. Suze Orman says that saying yes and no to your children should not be dependent upon the economy, it should be dependent upon the values by which you choose to raise your children.
Here is a little quiz that she suggests you give your older kids before they go off to college and get inundated by credit card offers:
1. $1,000 credit card balance at 20% interest paying the minimum. How long will it take you to pay off that balance?
a. 5 months
b. 3 years
c. 16 years *
2. How much interest would you have paid on that debt by the time it is paid off?
a. $432
b. $1000
c. $1694*
3. If you are late on your payment, over your credit limit, or miss a payment, will it:
a. Affect your ability to rent an apartment?
b. Affect your ability to get a job?
c. Affect your ability to get a student loan or a cell phone?
The answer to #3 is all of the above. Your credit score can come in to play with all of these transactions.
Suze also has a list of five things every parent should do:
1. Start talking to your kids about money.
2. Get your kids to value money – let them see you pay for things in cash.
3. Don’t reward your children with money.
4. Be an example for your children.
5. Teach your kids how to prioritize.
Dan Kadlec, contributing writer for Money Magazine recently wrote a wonderful letter to his college bound daughter. Are you looking for some pointers? Give it a read.
The ramifications of the current economy will be widespread and far reaching. By joining together to solve economic problems hopefully one of those effects will be stronger, closer families and a new generation of kids who know how to manage money.
When you hide your financial worries from your children you are doing them a disservice. You may not want to worry them but your kids will know that something is wrong. Children have an amazing ability to blame themselves for everything. They are already worried and, if you don’t talk to them, it will be up to them to figure out what’s going on.
Unless your children are very young there is no reason you can’t say to them that your financial situation has changed. Formulate a plan for how everyone is going to work together and deal with the situation. Avoid a panicky, “sky is falling” talk. Creating a team atmosphere brings families closer together. Instead of keeping the children in the dark, everyone is working for the betterment of the family.
In an age appropriate way you can involve your children with money management as soon as they understand math. Younger children can start with the grocery store. Give them a budget and allow them to choose their own cereal or after school snacks. The older the child, the larger the budget and the longer the list. As a bonus, if you work it right, you can have your teenagers doing all the grocery shopping!
Use this opportunity to begin teaching your children the difference between needs and wants. Make your children earn their allowance and, when it is spent, it is spent. In this way, your children are being taught the value of money and how to manage it. It is never too late to talk to your kids about money. Just because you’ve always done things one way, don’t be afraid to change. You can acknowledge to your children that yes, you did always used to let them have a new whatever, whenever but, sorry, you can no longer do that .
Rest assured that even if you choose not to talk to your children about money everything you do with money teaches your children something. If you spend money that you do not have and buy things that you can not afford then that is the lesson you will teach them.
A lot of people are dealing with this issue right now because of the downturn in the economy. Suze Orman says that saying yes and no to your children should not be dependent upon the economy, it should be dependent upon the values by which you choose to raise your children.
Here is a little quiz that she suggests you give your older kids before they go off to college and get inundated by credit card offers:
1. $1,000 credit card balance at 20% interest paying the minimum. How long will it take you to pay off that balance?
a. 5 months
b. 3 years
c. 16 years *
2. How much interest would you have paid on that debt by the time it is paid off?
a. $432
b. $1000
c. $1694*
3. If you are late on your payment, over your credit limit, or miss a payment, will it:
a. Affect your ability to rent an apartment?
b. Affect your ability to get a job?
c. Affect your ability to get a student loan or a cell phone?
The answer to #3 is all of the above. Your credit score can come in to play with all of these transactions.
Suze also has a list of five things every parent should do:
1. Start talking to your kids about money.
2. Get your kids to value money – let them see you pay for things in cash.
3. Don’t reward your children with money.
4. Be an example for your children.
5. Teach your kids how to prioritize.
Dan Kadlec, contributing writer for Money Magazine recently wrote a wonderful letter to his college bound daughter. Are you looking for some pointers? Give it a read.
The ramifications of the current economy will be widespread and far reaching. By joining together to solve economic problems hopefully one of those effects will be stronger, closer families and a new generation of kids who know how to manage money.
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