4 Tips you need to know
Do you consider yourself to be financially empowered? When you make financial decisions and plan your financial future, do you do so with confidence? It's very comforting and reassuring to feel confident and empowered when it comes to finances, so of course, that's a quality you want to pass on to your children. But just how do you go about raising financially empowered kids? Here are a few tips.
Talk about money at home.
The number one way to raise financially empowered kids is to talk about money at home. Don't make this a taboo topic; make it something you and your partner discuss openly around the kids, and make sure they know it's okay for them to talk about money, too.
When you're facing a big financial decision, share age-appropriate details with your kids. Let them know what factors you're considering in making this decision, and explain how the decision will impact your life.
Fostering a sense of openness around money will establish, early on, that money is not something to fear. It will also help ensure that your kids feel comfortable coming to you with questions about money, which will help them learn more about money and spending as they grow up. Financial empowerment and financial knowledge are closely linked, so the more your kids learn, the more empowered they'll be.
Be transparent with the family finances.
Sometimes, when kids enter college and start taking control of their finances, they experience a sort of sticker shock when they suddenly realize how much things cost. This sticker shock can shake their confidence with money.
If you are transparent about the family finances all along, then your kids are less likely to experience this shock. Let them know how much your mortgage payments are, what you spend on groceries each week, and so forth. An easy way to do this is to have family budget meetings once a month. Together, you can review how much the family spent on various items the past month, and also plan what you'll spend the next month.
Give them an allowance.
A great way to teach financial empowerment is to let kids practice spending and budgeting when the stakes are still low and when they're still only working with small sums of money. To do this, you'll need to give your kids an allowance.
Rather than just handing your kids' allowance money each week, talk with them about how they plan to spend it. Depending on the child, you may want to set some hard-and-fast rules in this regard, or you may just want to give them some suggestions. Teach them to spend, save, and donate a certain percentage of their allowance each week, just as they would an actual income.
When your child does start working, these spending, saving, and donating habits will already be engrained. It's a lot easier to feel financially empowered when you're in the habit of saving.
Let them make mistakes.
As your child manages their allowance, don't be afraid to let them make mistakes. Do they want to blow all of their money on a pair of jeans rather than saving part of it? You can explain why they may not want to do it, but ultimately, leave the decision up to them. Mistakes made at this stage are little nudges and tools for learning. If you don't let them make mistakes until they're older, those mistakes will be a bigger blow to their confidence.
Raising financially empowered kids is a great way to set them up for a lifetime of success. Follow the tips above, and above all else, remember to be open about money. It's not the taboo topic it was in the past, and that's a great thing for this next generation.