Travel (MP) For most people talking about money is a touchy subject. According to an American Psychological Association survey money is consistently among the top reasons for stress for Americans every year. Rather than address the issue many families suffer in silence. The 2014 survey showed that 36 percent of Americans are uncomfortable talking about money, and 18 percent admit money is a taboo subject in their families.
More than ever before helping your kids become financially literate is more important, professionals insist. Why? Previous generations use to rely on pensions and social security benefits to sustain them after retirement. Those days are gone. Now, people should start planning — and saving for— retirement decades before hand. So what to do?
Open a money dialogue with your family
First, are you and your partner sharing the same dreams for the future? Do you have any debts that you’re hiding? Are you in better – or worse – financial shape than your family might believe? Are you in agreement about how to handle your property in the event of the other’s passing? Is your relationship fulfilling you, making you happy?
Including your entire family in every financial discussion is the beginning. You may wish to avoid the word “budget,” given that makes people think of cutting back. Instead, sit down together to formulate a family spending plan. By concentrating on what expenses are important to your family, you will naturally find strategies to cut back on items that don’t really matter.
Keep goals up-front. Ask your spouse when he/she wants to retire and what he/she wants to do after retirement. Ask what his/her dreams are – where would they like to be in five years, or ten years. The point is to think positively about money by asking where it can get you.
Consider making a bulletin board to represent your family’s financial goals. A daily reminder of the vacation you’re saving for or the house you’d like to buy helps both kids and adults keep big-picture goals from getting lost inside the day-to-day shuffle.
A family that saves together, plays together
Once you decide to save for something as a family — such as a new tablet or a vacation — show your kids what saving money actually looks like. Get a big jar, and each week add money to the jar so the kids can see the savings grow. When you have enough saved, comparison shop together to help the children understand how to look for the best value for their dollar.
Experts recommend giving children an allowance as a way for them to become financially literate. But don’t tie those allowances to chores. That tends to backfire when kids expect to get paid for everything contribution to the family.
I recommend getting a piggy bank that’s divided into sections. Each time the child receives an allowance, he or she should put a small part into each section:
- Saving — Children can set a spending goal and save in this section to meet these goals.
- Investing — Help your kids learn to save for future investments. After you have enough money saved up in this section, you can help your child open an investment account.
- Spending — Kids can spend freely from this section. But when the money’s gone, that’s it!
- Donating — By setting aside funds to donate, children learn the value of charity.
After your child reaches his/her teens transfer their allowance to a prepaid credit card. In this way, children can learn to track how much they’ve spent and how much they have left to spend. When they go on to use their own debit and credit cards, they’ll already understand the value of tracking and managing electronic money, which we know can really get away from you. Talking about money with our families doesn’t have to be hard it just has to be.