Before the pandemic, many parents, especially those struggling financially avoided talking about money with their kids. They say it was uncomfortable. However, it is important to make sure your kid is financially smart, especially right now. And this is why.
The pandemic has worsened the financial lives of many parents. Millions have lost their jobs and many more are struggling with basic expenses like food, utilities, and rent. But despite the tough economic times, experts say now is a good time to teach your kids about money.
During these unprecedented times, children are paying attention to what's going on at home. As such, it's wise to share how your family is being impacted and what you can do to better the situation.
The aim here is not to induce anxiety, but to initiate healthy conversations about the pillars of good financial habits. So, where do you start? And what can you do to help them learn about money during these difficult times?
Face Your Fears, Start With The Uncomfortable
Many parents don't want to answer questions like 'how much money do you make' when talking to their kids about money. This is because may have made mistakes with money or feel like they don't know a lot about finances.
But if you want to prepare your child for the future and help them become financially smart, you must face these fears. Accept that you don't need the perfect role model to teach your kids financial skills. So leverage your mistakes.
For example, explain to your children that many Americans, you included, fell into the trap of living paycheck to paycheck. Tell them you didn't have enough money for a sudden loss of income. But don't stop there.
State your financial position right now, your plans going forward, and how you intend to improve your financial life after the pandemic. This will help them see the world more realistically.
Don't Say Yes All The Time
Kids need to distinguish between needs and wants. However, some parents sacrifice too much to make their kids happy. But now that you've told them about your current financial position, it may be wise to learn to say no.
Before doing so, discuss necessities and wants. This will help you avoid tantrums when you say tell them to wait or say no. And they will subsequently become more financially smart.
It can be a costly mistake to give your child everything. For instance, many parents find out that they focused so much on giving their kids everything they want at the cost of their retirement savings. So balance your financial needs with those of your children.
Use this time at home to show your kids that spending time together is more important than buying the gifts. They may not like it now, but they will thank you later.
Warn Them About Debt so They Can Be Financially Smart in The Future
Many Americans admit their financial lives have been worsened by debt during the pandemic. They further say it's a result of living beyond their means. Many now worry about paying their bills and meeting other financial obligations.
Unfortunately, many parents don't teach them about the dangers of debts. They wait until their kids come home or ask for help to have the discussion. Don't be that parent.
Sit down with your child. Talk about debt and its repercussion. Advise them to learn to live within their means to avoid falling in the trap of living from paycheck to paycheck.
Show Them The Value Of A Dollar
Many kids don't understand the true cost of things. This is major because parents don't involve them when making big decisions, such as planning a vacation or buying a car.
If you don't make your kids understand the value of a dollar, they won't have the right tools and resources to make informed decisions about major things such as what careers to choose or what college to go and why.
They will just be thinking about engaging in 'cool' things without thinking about the cost. So help your kids understand this by getting them involved in big purchases. For example, help them understand that you have to work for many hours to afford a vacation, buy a car, and foot other bills.
Parents have a major role to play in their kid's financial future. Those who use these challenging times to teach their kids about money are more likely to make them smart.