05 Mar What Kids Need to Know About Money
The other day I was hanging out with my kids when I noticed the unmistakable mirror image of my habits in their behavior. As they mimicked my every move, it dawned on me that my children learn from watching me. Children spend a lot of time watching their parents and pick up on the behaviors they see. Not only is this true with your personality traits and behaviors, but it’s also true with your spending habits.
This got me thinking, “What will my legacy be?” When my kids inherit my estate, will they be prepared to manage it? My wife and I work hard to teach our kids about money. We teach them the envelope system, we talk about budgeting with them, we teach them the importance of hard work to earn money. We even teach them how to set goals and establish a plan to reach them. But the one thing missing was showing them the same principles through our actions.
But then I remembered that we are teaching them through our actions. They see us going through the budget together. They see us using cash envelopes in the checkout lane. They see the goals we have posted on the fridge to keep us motivated. I guess I do know what our legacy will be – kids who know the principles of money and have the knowledge and skills to live debt-free lives. That’s a powerful legacy.
Consider your legacy
What will your legacy be? What are you teaching your kids about money? If you’re uncomfortable talking about money, now may be the time to start. Here are some things your kids need to hear from you: They need to know that you have money. They need to know that you budget. They need the life skills to manage their money when they are on their own. They need to know how to stay away from debt. You can tell them that credit cards are bad but they won’t know how to avoid them unless you teach them. Teach them how to do a budget. Teach them how to save for large purchases. Teach them through your actions. They watch you. They learn from what you do. If you overspend on impulses or turn frequently to the all-too-convenient credit card, chances are they will do the same thing when they become adults.
Will you teach them?
Will you teach them the time value of money and the importance of investing early? Will you teach them the long-term negative impact debt has on their lives? Perhaps most importantly, will you share with them the mistakes you’ve made with money and teach them how to avoid making the same mistakes? We all want our kids to do well, perhaps even better than us. It’s our responsibility to help them get there.Matt Wegner is a personal finance, small business and leadership coach focused on teaching his clients the tools for L.I.F.E. (Living In Financial Excellence). Need to get your finances in order so you can teach your kids? Apply today for a free planning session with Matt or visit financialexcellence.net.