SHHH! DON’T TELL THE KIDS WE WENT BANKRUPT!
NO! Don’t tell them that life is anything but a reflection of Hollywood!
What a way to set your children up for future problems. Believe it or not it is very healthy for children to be educated in all sorts of real life skills and that includes knowing how to manage financial challenges.
Unfortunately, our education system does not adequately prepare children with many real-world skills, especially handling finances. Children should be taught how to budget money for a variety of different reasons, they need to understand how budgeting applies to business, tax compliance and perhaps more importantly household management. They also need to get a grasp on using credit appropriately as well as understanding the costs and consequences of not staying on top of their financial lives.
At Locke Consulting, when we conduct counselling sessions, we recommend parents, with children living at home, involve their kids in planning various facets of the family budget. Even simple things like planning meals, including the costs of their choices, or paying household accounts – “hey kids it’s mortgage week this week” – provides a message that will help to teach your children to be better money managers. Talking about money and budgeting doesn’t have to be depressing, unless of course you are still living beyond your means.
Ask your kids for their input into financial decisions by weighing what is more and less important to them “listen guys if you want a pizza party with your friends this weekend you can’t rent movies for two weeks“. Tell them how and why money is allocated for different purposes. You could create graphs that the kids can manipulate – perhaps with a dry eraser on the fridge door – showing money in and money out. Encourage them to discuss financial goals and how they will be achieved.
Make budgeting a fun family event “O.K. family, get comfortable, it’s budget time“. Doing so will you provide an opportunity to check in with everyone on their changing needs “so Sally, are you going ahead with the pizza party this Saturday or did you want to go to that concert at the end of the month instead?“
What and how are your children going to learn about money management if you make budgeting and money management secretive?