Talking about money matters at the dinner table may not have been polite conversation long years past. But the bombardment of news about the economy and market has forced many families to face facts and talk up. More than ever you need to work on the household finances as one cohesive unit.
Financial experts suggest setting aside a couple of hours a week as to talk about the family’s expenses. Let your children see you pay monthly bills and balance a checkbook. “Give them the banking experience,” says Gwendolyn V. Kirkland, a certified financial planner and managing principal with Kirkland, Turnbo & Associates in Chicago. “Have them go with you when depositing money in a bank or let them see you paying bills online.” You want establish a mindset that every dollar you earn is not just about spending it on things, Kirkland adds.
Here are some other money management principles you and your family should practice:
Appreciate the value of a dollar. Teach your children to value money by having them put whatever loose change they find into a jar. Somewhere around age five, start giving your child an allowance—it can be monthly or weekly depending on your family budget and financial situation. Set a certain dollar amount and then increase it by $1 each year.
Help your children to understand that accumulating wealth is about saving and investing, not buying and spending. Teach them that their assets have nothing to do with what label you wear or owning expensive games.
Just as you have a spending plan, so too, should your children. Write down and track expenses each month—school supplies, CDs, movies, snacks, clothing and so on. Have them plan for buying the things they want.
Earmark money for investments and giving back. Just as you are to set aside a portion of your paycheck for savings and investments, your children ought to do the same with a portion of their allowances, monetary gifts and wages from any part-time work.
Be very graphic. So, “you might have three envelops. One for saving, one for investing and one for charitable giving,” explains Kirkland. Put 10% of their money in savings, 10% in investments, and another 10% towards charitable donations. The remaining 70% can then be used to spend.” Kirkland says it is very important to teach children about giving back. “Let them know that they are part of a community and that they have a responsibility to their community.”
Also, encourage friends and relatives to give them stock for a birthday gift, a Christmas stocking stuffer or a graduation present, adds Kirkland. “Children need to know what it is like to be part of a company and to get connected into the larger economy.”
Interestingly enough, says Kirklad, a kid favorite, McDonald’s, has done very well in this recession. Another is Disney as well as Apple. These are companies that family members can relate to and can become a part of their overall investments, Kirkland adds.
Further Reading: Wealth For Life Principles
1. I Will Live Within My Means
2. I Will Maximize My Income Potential Through Education and Training
3. I Will Effectively Manage My Budget, Credit, Debt, and Tax Obligations
4. I Will Save At Least 10% of My Income
5. I Will Use Homeownership as a Foundation For Building Wealth
6. I Will Devise An Investment Plan For My Retirement Needs And Childrens’ Education
7. I Will Ensure That My Entire Family Adheres To Sensible Money Management Principles
8. I Will Support the Creation and Growth of Minority-Owned Businesses
9. I Will Guarantee My Wealth Is Passed On To Future Generations Through Proper Insurance And Estate Planning
10. I Will Strengthen My Community Through Philanthropy