Give Your Graduates the Gift of Financial Know-how
Teach Financial Planning to our children
Posted May 16, 2019
As the school year comes to a close, all of us who are parents start wondering if our children are ready for the next chapter in their lives, especially if it’s one of those pivotal years when we’re about to watch them receive a diploma. That holds whether your child is moving from pre-school to kindergarten or graduating with an advanced degree. As parents, we reflect on how well we’ve contributed to their readiness to embrace the challenges to come.
Each child will take with them their acquired knowledge, attitude, skills and habits—and that includes the money imprint we’ve handed down to them through our own actions.
When it comes to dealing with financial decisions, many parents wonder whether they’ve done enough to prepare their children to make wise choices, avoid debt problems and be able to become financially independent. If you didn’t grow up with supportive and informative experiences around money, you might discount its importance or you might not have the faintest idea of how, what and when to communicate with your child.
In fact, many parents don’t feel equipped to talk about money issues with their kids. This year T. Rowe Price’s 11th Annual Parents, Kids and Money Survey found that 36% of parents said they were uncomfortable talking with their kids about saving for college—a discomfort level that ranked just slightly below talking about sex and drugs.
Maybe your child is leaving college with a mound of student loans or facing their first paycheck. Or maybe they’re earning money from a part-time job and they’re likely to blow it on something they’ll come to regret. Their path is never quite as secure as you’d like it to be. Here’s another scary statistic: the non-profit Youth Financial Literacy Foundation says 18 to 24 year-olds are the fastest growing age group filing for bankruptcy in the U.S.
If you’re in credit card hell and you spend frivolously, receiving collection calls and notices, your words of financial prudence will fall on deaf ears. “Do as I say and not as I do” has not proven to be a useful guide in raising financially capable offspring. Your behaviors will be the ones mapped and modeled.
But rest assured, depending on the ages of your children, there are resources available to help. For example, if you’re a young parent, begin with Ron Lieber’s book, “The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money.” The book lays out a foundational argument for establishing values and introducing age-appropriate lessons to your children.
If you haven’t done a great job in modeling for your older children, maybe the place to start is with a conversation about mistakes and how you are working to correct them. Being able to have honest open communications about money with your family members is critical in creating good habits. It’s perfectly okay to tell your children that your knowledge is limited. After all, no one is masterful in all aspects of life; it shouldn’t cause shame or bad feelings. The question is, what are you doing about it?
If you’re not a physician do you feel badly if you cannot self-diagnose or know what medications are appropriate? If you’re not an airline pilot, do you feel badly that you don’t know how to fly a jet? But somehow, when it comes to personal finance, people feel a deep sense of regret, as if they should somehow magically be experts.
Here are a few more resources you might investigate for yourself–or give your children as graduation presents:
“Why Didn’t They Teach Me This In School? 99 Personal Money Management Principles To Live By” by Cary Siegel
“From Here to Financial Happiness” Jonathan Clements
“Adulting 101: #Wisdom4Life” Josh Burnette and Pete Hardesty
If the personal touch is more your style, align yourself with a planner who can coach you through the learning process and will take the time to explain, help, guide, and support your values with actionable items.
Parents want to know they’ve done the best job possible in preparing their children for life and creating sound money knowledge, attitudes, skills and habits is an important part of the job. The next step you take in talking about money is an important one, whether your child is getting a laser-printed diploma decorated with cartoons or a degree signed by the Dean.