How Should We Teach our Children Fiscal Responsibility?

July 31, 2013 at 7:42 PM

Question:

We have a young adult son at home and want to instill monetary values in him. The problem is we have not been diligent about our own fiscal responsibilities.  How do we explain a good financial foundation to him when our financial life is a mess?

Answer:

Sign Up for E-News

Even in today’s dire economic environment, money is among the lowest priorities in conversations between parents and their children.  We, as parents, seem more concerned about the politeness of our children than their financial fitness.

Dollars and cents should get the same attention as please and thank you at home.  Financial education builds critical skills that help put life goals within reach and strengthen the economy.  Parents must make financial lessons a priority in both conversation and action as early as possible.

As important as teaching your kids about money is making sure that you are teaching them the right lessons.  It never hurts to brush up on the basics.  It is common in my work as a CPA to come across financial misunderstandings that people have held onto for decades.

Many parents may be reluctant to talk money with their children because they themselves lack a basic understanding of money management.  As a result, there are a lot of people overloaded with debt today, which will be a burden for many years to come.  We need to answer the question of who will teach the teacher.  It is never too late to start a plan or to get your own finances on track. 

Start Early

  • As soon as children are able to express a want, it's time to discuss basic ideas, like the idea of delayed gratification, which underpins the concept of budgeting and saving towards a goal. 
  • Require children to save a portion of birthday cash and, for older children, any money earned in after-school jobs.
  • Give children small jobs to earn an allowance to pay for toys or other wants.
  • Make saving fun. Give children the grocery list and have them clip coupons and comparison shop for lower prices by reviewing store flyers.  Split the savings with them to create a reward for the effort. 
  • Speak in terms that children can understand.
  • At a young age, children may not care about money for college and are more likely interested in money to buy a game or a bike or to have funds for a night out with friends.  Create teachable moments around those things your children genuinely care about.

Repeat Often 

  • According to a Harris Interactive survey conducted for the American Institute of CPAs, three in ten parents never talk to their kids about money or have had only one big talk.  Only 13 percent of parents talk with their children daily about financial matters. The more you discuss good financial habits, the more likely your children are to make those habits part of their daily lives as they get older. 
  • During dinner, talk about saving for a big purchase, such as a family vacation, and then discuss how significant expenditures might impact the family budget. 
  • Don't be afraid to show children your pay stub; use it as a vehicle to talk with them about taxes and saving for retirement. 
  • Review their savings account and college account statements with them.

Walk the Walk

  • No matter what a parent says to children about money, their actions are even more important.
  • Stick to principles of delayed gratification and don't show mixed signals by lamenting a lack of money then blowing your own budget on whims like going out to eat.

 

Robert J. Blackwell, CPA/PFS/CGMA is the managing member of the certified public accounting firm of Levine, Jacobs & Company, LLC.  He can be reached at rblackwell@ljcpa.com

Client focused, results oriented, we pride ourselves on the philosophy that “every account receives the expertise of the whole firm.” The partners at Levine, Jacobs & Company are true working partners with strong commitments to exceptional client service. We are hands-on and heavily involved with every aspect of our clients’ financial lives. Clients are matched with the partners best suited to their business and circumstances, ensuring the best possible service.

Client focused, results oriented, we pride ourselves on the philosophy that “every account receives the expertise of the whole firm.” The partners at Levine, Jacobs & Company are true working partners with strong commitments to exceptional client service. We are hands-on and heavily involved with every aspect of our clients’ financial lives. Clients are matched with the partners best suited to their business and circumstances, ensuring the best possible service.

The opinions expressed herein are the writer's alone, and do not reflect the opinions of TAPinto.net or anyone who works for TAPinto.net. TAPinto.net is not responsible for the accuracy of any of the information supplied by the writer.

TAP Into Another Town's News:

TAP Into Another Town's News:

Sign Up for E-News

Chatham

Upcoming Events

Carousel_image_875ec8ccf604406bb3ab_breakfast_with_santa

Sat, December 10, 9:00 AM

Charlie Brown's of Chatham, Chatham Township

Breakfast with Santa

Food & Drink Giving Back Police & Fire

Carousel_image_99c6d5f6a8e3337a84d8_couple

Sat, December 10, 5:00 PM

Madison Area YMCA - Kids Central, Madison

Parents' Night Out: Date Night

Education Giving Back

Tue, December 13, 11:30 AM

SAGE Eldercare, Summit

Tai Chi

Health & Wellness

To Be a Better Investor, Be More Rational!

Many posit the theory of rational man, who coolly and carefully calculates his self-interest in a logical manner. We all fall somewhat short of that ideal.  In the financial markets, irrationality can be costly. What are some of the common foibles, and what can we do to minimize their damage to our portfolios?

Don’t Make Decisions Based on What You Paid For an Investment

How ...

Chatham Borough Police Make Arrest for Theft, Possession

December 7, 2016

CHATHAM, NJ - A Chatham man was charged with Theft of moveable property, Possession of CDS (Xanax) with the intent to distribute, and Possession of CDS without a valid prescription.

On Dec. 6 at approximately 2:30 p.m., officers responded to the 100 block of Hillside Avenue on a report of a male taking packages from a front porch. A resident reported that she was alerted to the ...

January Open House at the F.M. Kirby Children’s Center of the Madison Area YMCA

December 6, 2016

The F.M. Kirby Children’s Center of the Madison Area YMCA, located at 54 East Street in Madison, will hold an open house on Monday, January 9, and Wednesday, January 11, from 9:30-11 a.m. and 4:30-6:30 p.m.

The F.M. Kirby Children’s Center of the Madison Area YMCA offers curriculum-based, comprehensive childcare and early childhood educational programs for infants, toddlers, ...