Having a conversation about finances puts everyone in an awkward position. Having to do that with your teenager can be something even more uncomfortable. With a stable income comes great responsibility, and being able to manage finances well is the key to live a steady and secure life. As a parent, it is essential to talk to your kids about finances in order to build a healthy relationship with money enabling them to become great money managers. This conversation, however, shouldn’t be treated as a topic that cannot be discussed. It is of utmost importance that your child understands money, treats it with respect and values every penny.
Children growing up and taking an interest in the family finances is quite natural, and hence, asking questions about how and where the money earned goes can be quite a pickle if you’re not prepared as a parent to have the conversation.
Therefore, establishing a healthy relationship between your child and money is crucial and should be inculcated in them from a very young age. It is essential to do so as it helps manage and plan finances out for both - the child and the family.
Read more about Things You Must Know as a Parent of a GenZ Teen to connect with your children better.
Here are a few ways in which you could have a healthy conversation about wealth with your children
Before wanting to invest in a productive discussion with your children, make sure you are caught up on all the current trends in the market, you adhere to the values that you preach (kids learn from parent’s experiences) and are aware of how financially literate you are.
A discussion about finance should not ever happen once. It cannot be limited as it keeps coming up every day, in the smallest of things we do. At the young age of 7 or 8 years, it is crucial to include and educate children about the use of finances as they understand Math and are constantly looking to apply it to everything possible.
From a shopping spree to encouraging them to have a piggy bank for savings, that’s all it takes to get them started. This goes a long way as they are made aware of money as a commodity and the significance of it.
Setting a budget for their weekly/monthly allowance is an excellent way to stir up a conversation. This will help them set goals and resist urges to make purchases of things they don’t need but want. The concept of ‘need’ and ‘want’ needs to be made clear. Before spending any money, it is always the best practice to ask yourself if it is a need or a want. Keeping a tab on their expenditure is also necessary.
FamPay is one such product that helps parents and their children stay connected via an app that helps manage money efficiently enabling the parents to keep a constant check on their expenditure and guide them through the process of money management so as to help them grow into efficient adults.
Budgeting and savings
Start small by making your children understand these concepts practically. From childhood, introduce a system of saving all the money they get, on birthdays, festivals, and holidays by efficiently dividing it into expenditure, savings, and donation. This will help your child understand the importance of savings for the future as well as emergencies while developing the trait of being able to donate a part of an individual’s earnings to someone needy.
FamPay also looks at this angle and helps teenagers understand the importance of money management.
Read more about Savings for teens
Ethics and values
Linking money to hard work and honesty rather than stressing on its monetary value is one thing to be kept in mind while having the conversation. This is a great point to make while you emphasize how important it is to work to get the money that buys them things. Here, the spotlight could be on the ethics that you want your child to pick up while also keeping in mind not to make comparisons with another person or family.
Everyone has their individual choices and problems to solve, and it’s best not to compare because that could cause stress in your children when they think about using money.
Loans and credit cards
Information about loans and credit cards need to be adequately conveyed because if not, there are chances of your children ending up in debt. When your kids are 20, a lot of loans and credit cards get offered to them and if ill-informed, lead to debt, one after the other. However, taking loans to invest or using a credit card with an affordable limit is a smart decision- given that the income and expenditure are taken into consideration.
Children today know and understand a lot more than we expect, and we should not underestimate them. Understand that there should always be space for making mistakes so that they learn from it and adhere to the values taught to them. Having a fruitful conversation about finances can go a long way and with the usage of the latest technologies like the FamPay App can help monitor and help teens manage money efficiently.
Read more about FamCard - debit card for your children