Paul DeLauro, manager of Wealth Planning at City National Bank, doesn't remember his parents being open with him about money when he was a child. He knows that his dad was successful, and that allowed his mother to stay home with their three kids.
There was always food on the table, and the mortgage was always paid.
In his memory, they were comfortable but frugal.
But DeLauro also remembers how he and his siblings weren't encouraged to ask their dad questions once he retreated to his den every night, and that's where he suspects he did most of his work regarding money.
“After he passed away, we learned he was writing ledgers in tiny script on graph paper: what he did that day, how much money he spent and on what," DeLauro said. “He saved information on absolutely everything, but much of the information he tracked and saved was the wrong thing to track and the wrong thing to save."
Joline Godfrey, the author of "Raising Financially Fit Kids," and CEO of The Unexpected Table, has similar surface-level memories of growing up on her family's dairy farm and watching her grandparents handle financial responsibilities. “I was aware at a very young age that my grandfather was in charge of anything that got dairy products to customers, but it was grandmother who was in charge of the money," she said.
It's not uncommon to go through childhood without having open conversations—or really, any conversations—with parents regarding money.
The reason for some of that, DeLauro thinks, has to do with the fact that adults are mostly teaching themselves how to handle funds as they go along. And other behavioral clues, Godfrey feels, point at adults concluding that this lesson is too tough to teach.
Still, both stress that being closed off about this topic is not healthy. Instead, parents should be open with their children about money, ideally starting from a young age.
All parents want to raise happy, healthy and self-sufficient adults. And while there's plenty of wisdom to teach through the years, properly handling money should be considered a vital part of those lessons.
“Money is a language of independence," Godfrey said. "Kids who grow up with an understanding of how to use financial capital to stay safe, make their own choices, exercise generosity, and plan for the future will have vastly more expansive lives."
In the 20 years that Godfrey has been researching and teaching this topic, she's learned that parents can start discussing the basics with their children when they are as young as five.
They should routinely repeat important messages — like budgeting, saving and responsible spending — and work to make those lessons part of their children's underlying character. Because this is a long-term strategy, the earlier you start teaching your children, the better.
“Don't put off financial education and practice until kids are older. They get older fast, and the longer parents delay, the easier it is for popular culture, peers and the internet to fill the void," Godfrey said.
“There are also parents who say, 'It's too late, my kids are 16 and we haven't started.' To me, that's code for, 'It's too hard, and I'm not willing to put in the effort.' Starting later just means it's a more intensive process. You still have to start at the beginning and give teens time to practice so they can master basic financial skills."
Discussing money with children can be challenging for both parties.
So, as you prepare to talk, remember to make it feel less like a lecture and more like a casual chat. To do this, DeLauro suggested thinking of yourself as a manager. “What lesson in this age bracket are you intending that they learn?" he asked. “Make sure you think about that lesson and make it part of your thought process."
Once you have that message in place, repeat it in daily interactions, as Godfrey advised. And as kids get older, feel free to include them on big financial decisions, too.
Children will learn as you guide them through a money situation, which should include explanations on your reasoning and any mistakes you've learned to correct along the way.
“Remember that kids can find most any information online," Godfrey advised. “Better to be proactive with financial decision-making and use household opportunities for teaching and learning."
DeLauro added to Godfrey's method by encouraging parents to show older children how to set up auto-payments and how your account is debited and credited.
“Forcing the child to sit with you during these mundane times will help focus your mind on your lifetime of learning," he said. “It will force the child to learn that you have to master the mundane in life. Managing finances, while not fun, is a critical component of being an adult."
Even though the details of your financial lessons will be specific to your experience, there are some general guidelines Godfrey tells parents to keep in mind.
From ages five to eight, parents should begin to introduce basic money terms to their children.
Children ages nine to 12 are old enough to start making money decisions based on their values, and should be given more opportunities to earn money.
And by 13 to 15, Godfrey continued, kids can practice basic independent financial decisions.
When children are between 16 to 18, she noted, they should be able to show parents some fiscal management skills — especially in terms of choosing a financially appropriate college, or overseeing the paychecks they get from a part-time job.
This is also the time for parents to begin teaching their children about long-term financial planning, which will come in handy at 19 and beyond as kids develop credit, establish savings and start careers.
By keeping this guide in mind as much as possible, parents should be able to see lasting results. And even if you're starting late, Godfrey added, you can still build upon the basics and go from there. The point is to be as open as you can with your finances, and then use those lessons to give your children the foundation they need to succeed.
“I worked with a group of 16-year-olds that I met when they were seven, and they are some of the most thoughtful, responsible kids you will ever meet," she said. “They will make a difference in their families and their communities. That's what happens when you give kids the values, skills and opportunities to practice financial responsibility."
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