You might have an amazing grasp on your finances, but do your kids know how to handle money? Our job as parents is to raise independent, responsible adults, and financial know-how plays a big part. Ellen Rogin, a women and money expert, talks to the 30Second Mom community about How To Help Your Kids Be Great With Money! Ellen is a Chicago-based mom of two teens in addition to being a CFP, CPA, speaker and business owner. She co-authored Great with Money: The Women’s Guide to Prosperity and has been quoted in a wide range of national and local publications, including “Money” magazine. Check out our interview with Ellen!
Q: When’s the best time to start talking to kids about money?
A: It’s a big mistake to wait! Experts say kids’ money beliefs are formed by age 7. Are toddlers too young to understand money? No! What they see parents do has a huge impact. Start early! Young kids grasp the ideas of saving, sharing, spending and waiting for what you want.
Q: You say, “start early.” How do we teach preschool kids about money?
A: Note what you say. Do you say things like, “I’m out of money?” Instead, let kids see you make good choices. Be deliberate when you discuss money around kids. Don’t argue. Make sure they pick up healthy messages. Show kids how to have fun without spending money. Play board games, play games outside or go to the park. Tots can hold money and make small purchases. Kids learn the names of coins and to spend only what they have.
Q: What are five things parents should keep in mind to raise self-sufficient kids without money hang-ups?
A: Be clear on money lessons you want to share. Want to inspire kids to save? Make a difference in the world? Express gratitude. Teach kids to focus on what they’re grateful for. It’s a way to put money in its place. Be generous. Give and volunteer as a family so kids learn helping others is one blessing of having money. Stop whispering: money doesn’t need to be a secret. Open the conversation; tell kids what you’re doing and why.
Q: So how to get started teaching school-age kids good money habits? Consider an allowance?
A: Each family has to decide at what age to start giving allowance and how much money to give. Allowance teaches money management. Kids can divvy up three portions: saving, spending and giving to help others. Valuable lessons can be learned when your kids have to save up and wait for something they want. Allowance is a great way to teach kids to spend only money you have; you can’t buy everything you want!
Q: What are the biggest money mistakes parents make?
A: Not talking about money! But, it’s not too late. Tell them you’ll learn about money together. Giving kids everything they want. Teach delayed gratification, a skill that will be useful all their lives. Living beyond your means. Think kids don’t know? Arguments and worried whispers create kids’ money personality. Dealing differently with girls than boys when it comes to money. Fifty-one percent of US wealth is controlled by women!
Q: How do we deal with teens who earn their own money? What can parents do to help them learn to manage it?
A: Don’t be an ATM parent! Always There with Money. Train kids to do what it takes to get what they want. Teach the magic of compound interest. Calculate the benefits of starting a savings account with part of a paycheck. Let teens pay some of their expenses: their cell bill, movies. Let them make mistakes while stakes are low. Let them open a credit card. It teaches the importance of good credit and the waste of carrying a balance. Guide teens to be lifelong learners. Show them you’re still learning and share ways to learn about money. Train kids to use their minds to picture reaching goals, to mentally rehearse the financial outcome they want. Once a teen has a job, teach the advantage of a Roth IRA or individual retirement account and investing.
Make sure to check out Ellen’s tips on the 30Second Mom page, as well as her website and following her on Twitter!