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Some of the most helpful and beneficial life lessons you can teach your kids involve finances and responsibility: how to save, spend wisely and invest in their future.

You don’t have to be a financial whiz to talk to your children about money. No matter your level of knowledge, there are some simple lessons you can pass along to help your kids start good habits.

Whether your child just started school or will soon don a cap and gown, eventually they’ll need to know money basics. By talking to them, you can ensure the right information comes from someone they trust.

Here’s a checklist to help you get started, and keep the conversation moving forward.

Invaluable Opportunities

  • Start early. It can be hard to know where to begin with a topic so large. Don’t worry; there will be plenty of chances to get a dialogue going: Money matters are naturally woven into our everyday experiences.

  • Set the tone. Find the fun in talking about how they’ll spend their birthday money. Thoughtfulness about more serious conversations can help foster openness and understanding.

    • Some things are easier to talk about the more they come up – putting less pressure on that first, and next conversation.

  • Ask them what they know. Nobody knows your child like you. Still, what they already know may surprise you. Ask what they’ve learned in school. Be sure to respect their level of knowledge and comfort with topics.

  • It’s never too late. But don’t wait too long. Studies show that kids can grasp and form impressions on money matters from an early age.
  • Helps your own finances, too. Revisiting the essentials, in order to pass them along to your child, can help you remain mindful of positive practices in your own money matters.

“Whether your child just started school or will soon don a cap and gown, eventually they’ll need to know money basics. By talking to them, you can ensure the right information comes from someone they trust."

Money – It’s about Values

Money matters go beyond dollars and cents. Our financial choices say a lot about who we are and the kinds of lives we want for ourselves and our families.

  • Encourage their curiosity. Your kids will learn many money-related concepts through experiences. If your child asks you a question, be honest – but you don’t always have to be specific.

  • Don’t be shy. Until your child becomes independent, make the most of your opportunity to be their best source of financial knowledge.

  • Buying. Growing up, kids witness plenty of buying – at the grocery store, for instance – way before they ever earn or spend their own money. Provide them with a sense of what makes a good deal, what to skip, and what’s best to wait for.

  • Saving. Instill the time-honored adage: “Pay yourself first.” It’s as trusty a rule of thumb as they come.

    • If the time is right, it may be a chance to encourage your child to save up for an item they want – and show them how. An old-fashioned piggy bank will do just fine.
  • Teamwork. Make sure they understand you’re rooting them on. Nobody is perfect with money, especially not at first.

  • Giving. Talk about the power of giving back to one’s community, to a cause, to say thank you or to help those in need. It can be one of the most meaningful ways we use money in our lives.

  • Rewards. One of the best parts of working hard or meeting a goal is enjoying the fruits of our labor. Even something as small as a special ice cream outing to recognize positive behavior can help your child understand the notion of earning a reward.

After the Lemonade Stand

Some topics may make more sense to bring up once your child understands the basics above. As they come of age, make sure they understand the opportunities and realities of managing their own money.

  • Independence. Talk to them about what it means to earn a living, make ends meet and save for the future. While this sounds obvious, it’s best to make sure your child has an accurate understanding.

  • Budgeting. Helping your teenager compose their first budget will get them into the groove of tracking expenses, allocating for needs before wants and so on. One useful framework is the 50/30/20 budget. Let them take ownership of their plan. After all, each person’s budget should reflect and further their own priorities.

  • Managing Expenses. Things can add up – and fast. Paying for rent, groceries, a cellphone and a car is all possible, but it’s important to show them that it can’t be a matter of guesswork.

  • Debt. Discuss how to be careful with debt – especially credit card spending. Make sure they grasp the pitfalls of not staying on top of payments.

  • Retirement. While it may seem far off to a young person, impress on them that investments in a 401(k) or other savings tools are likely to benefit from having longer to grow and accumulate market gains.

  • Balancing Act. Each of us, in some way, is funding the next stage of our lives. It’s vital your child knows how to meet their current obligations, while having a plan to help them meet their goals.

    • Young adults are delaying traditional milestones of adulthood, such as homebuying. Even so, make sure your child knows how to be financially ready for life’s big ticket items.
  • The Long Game. While no one can control every aspect of their finances all the time, let them know that strong and consistent financial practices will work in their favor, especially over the long haul.

Keep the Change

Without a second thought, we teach our children how to look both ways before crossing the street, how to brush their teeth and how to tie their shoes. Talking with your kids about money is no different – it’s an essential part of being a parent.

They’ll be thankful you did. You will be too.

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

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