Educating Your Children About Finances

Financial education is not often taught to students in school. That responsibility falls to the parents. Many families believe involving their children in how the family’s finances are handled is taboo. Still, financial planners believe it is the best way to begin to educate them.

“What you’re really doing is denying them an education,” says Joseph Oakley, host of the Enjoy More 30s podcast and a certified financial planner, “You’re denying them a framework to build upon.”

Oakley says that children will ultimately come up with their own financial mindset. That could be influenced by the world around them, including what they see on television or social media or through their friends. When they get that first job, they’ll likely be spenders or savers because they don’t know enough about managing their money, and Oakley says it is up to parents to teach them how to develop those skills.

Including your children in your financial decision-making conversations can be a great tool. Learning financial responsibility, Oakley says, doesn’t have to be anything like formal coursework but more like teaching them how to manage day-to-day money responsibilities. He suggests getting children involved by explaining how bills are paid online or why to use a credit card in certain situations and not others. Another example kids can relate to is spontaneous spending, spending money now versus saving it and spending it later. An example is limiting yourself right now because you will want to spend more money when on vacation.

When establishing savings accounts for young children, Oakley suggests you ask yourself whether your child will use that money within the next ten years. If not, he suggests putting it in an investment account with more growth potential than a traditional savings account which will earn virtually nothing. He says you don’t need to be an expert on the stock market to get involved but to look for asset allocation funds where you must decide if you want to be a moderate, aggressive, or conservative investor.

Most available financial resources, Oakley says, are geared toward people preparing for retirement because that’s where most of the assets are. He stresses the importance of working with a financial planner when you are a young adult because waiting to speak to someone when you’re close to retirement could be detrimental to your financial plans. He says it is easier for younger people to make life-changing decisions and modify paths.

To hear more financial advice from Joseph Oakley on other topics, like how to set the right priorities for financial success, checkout out our podcast K12 On Learning, available wherever you download your podcasts.