The only thing that complicates your finances more than not having enough income is probably having kids. They’re great, but they just don’t make a household budget any easier.
For Financial Literacy Month, there are a lot of different dynamics between parents and children that matter when it comes to finances.
Children can change your finances in a couple of ways. The Journal of Economic Psychology reports that improvement in managing a family’s finances comes as a result of being in debt and the birth of a child. So thank your children for helping you get your finances in order.
Children also help us look at things differently. You’re not letting your 5-year-old set up your budget, but an offhand comment can make you think a little more about what your plans really accomplish.
Finally, 97 percent of parents expect their children to receive some post high school education and 79 percent of parents expect to pay for some or all of that education. Creating a budget that helps take into account your future expenses can in part be attributed to having kids.
That’s what kids do for you, but there’s plenty more reasons to focus on teaching your children financial principles on a regular basis.
Parents are very influential on their children’s financial beliefs and behaviors. Parents influence attitudes about money, reinforce those attitudes by their day-to-day behavior and the patterns they exhibit can be seen in their children.
Children learn a lot simply through observation and indirect actions, but children’s financial knowledge is linked with their parents’ financial knowledge. That doesn’t stop once they move out of the house either.
The Hartford found that 70 percent of college students said their parents are their main source of financial information. Even if you introduce them to budgeting and the dangers of a credit card before they leave home, it doesn’t mean they’re finished needing financial information or help with money.
Communication helps children learn how finances work. It also helps alleviate two of the biggest worries parents have. Charles Schwab found that 93 percent of parents with teenagers worry their kids will make bad financial decisions like overspending or living beyond their means later in life.
The other worry? You guessed it –“the talk.” Nearly 70 percent of parents feel less prepared to give advice about investing than to talk about the birds and the bees. Having conversations or involving teenagers in financial decisions can go a long way to passing along good financial habits and knowledge. You don’t have to be an expert to help your kids learn about money and family finances.
There are benefits to having an open line of communication about money. A study in the Journal of Consumer Affairs found that girls who have higher communication levels with their parents read/use more of a product label. In that sense, being involved can lead to your children taking advantage of what’s at their disposal than if you weren’t.
This Financial Literacy Month, take the time to sit down with your children and discuss finances in some way. Teach them something they don’t know and make a plan to continue introducing them to the family’s finances and you’ll be rewarded with children who make good financial decisions.
Need a hand in getting a hold on your finances? Give a free debt analysis a try and get set on the right path to controlling your finances.