Published April 7, 2016.
Setting a good example is important.
Financial experts say parents are the key influencer for the financial habits kids take into adulthood.
So, the example you set today could impact your kids' ability to own a house, send their own kids to college, or retire comfortably.
With so much at risk, money is not a subject you should avoid discussing with your kids. Yet many parents struggle with the topic.
Here are 10 tips to you get started:
1. Admit your mistakes.
Talking openly with your children about your spending regrets gives you a chance to discuss the importance of comparison shopping, doing research, and waiting a day or two to see whether a potential purchase still makes sense.
Your kids will learn from your blunders. And they'll like hearing that they're not the only ones who make regrettable decisions.
2. Let your kids make mistakes when the stakes are low.
You're walking through a store when your daughter spots a princess doll and announces that she can't live without it. She's willing to spend the money she's been saving for a puppy.
Though you're tempted to talk her out of buying the doll, it may be better to let her make the choice. Later, if she regrets her choice, don't rub it in. Remind her that while her goal of a puppy may be delayed, it's still achievable.
"Mistakes are part of learning," says Sherry Wallis, an STCU member and financial educator. "They're a good opportunity to think about avoiding impulse decisions.
3. Help your child set goals.
For a young child, the goal may be a special toy. Help him visualize success by making a chart with a picture of the toy, and stair steps, a pie or a thermometer to track his money-saving progress. Talk about ways he might earn extra money, perhaps by taking on additional chores.
Older kids should be taught the importance of short-term goals (such as fashions that don't fit your back-to-school budget), medium goals (such as a new computer) and long-term goals (such as college tuition or travel). Let them know it's OK to modify their goals as their interests change or other opportunities reveal themselves.
4. Put them on a budget.
For at least a month, put your teens on a budget, without giving in to requests for more money. Make sure they set aside some for short-, medium- and long-term goals, and some for sharing. Explain that the rest is for entertainment, outings with friends, and other non-essentials.
Now, ask your teen to track where every dollar goes.
"At the end of the month, ask whether there's anything they would change about their spending," says Wallis, who recommends spending diaries for adults, too. "It can help them see where their money may be slipping away, and where they need to adjust their spending behavior."
5. Talk about needs versus wants.
Everyone needs shoes. But they don't have to be the same sneakers worn by superstar athletes. We all have places to go. But no trip requires a convertible muscle car with the latest sound system.
That sounds simple, but the difference between "wants" and "needs" gets muddled when it seems like all the other kids are carrying the latest phones, wearing the freshest styles, and driving the hottest wheels.
"Mistakes are part of learning," says Sherry Wallis, "they're a good opportunity to think about avoiding impulse decisions."
6. Talk about your family budget.
Discuss how much goes toward food and other necessities; how much you set aside for long-term goals, including college and retirement; how much you allocate for family fun; and how much for giving. They may not realize the diligence that goes into making it balance.
Explain that splurging on one thing ultimately takes away from other opportunities. Buying a nice car may mean canceling the family's annual trip. Upgrading to name-brand clothes may mean spending less on movies, concerts, and other fun.
7. Keep it age-appropriate.
Your 6-year-old has $10 in birthday money. At the store, he picks out three items worth a total of $15. Now, you can talk about making financial choices, setting priorities and taking time to weigh decisions.
"If you buy the game, you won't have money for anything else. But if you don't buy the game, you'll have enough money for the car and the coloring book. Maybe you want to think about it for a while. That's what Mommy and Daddy do when we're shopping for something important."
Your 13-year-old might already be looking forward to owning a car. Now - not when she turns 16 - is the time to discuss the importance of setting financial goals, the advantages of compound interest, and the pros and cons of borrowing money.
8. Discuss the importance of sharing.
Children learn empathy and a sense of satisfaction by giving a share of their money to causes that matter to them. If possible, help her deliver the money in person.
9. Teach your kids that money doesn't buy happiness.
Remind them of a memorable occasion that didn't cost much money. Maybe you went hiking and saw a fawn. Maybe you played charades with cousins and laughed so hard that no one knew who won. Would that memory be sweeter if you had spent a bundle?
10. But acknowledge that spending is fun.
Let your kids know that it's OK to buy something just for fun, if you have met your other obligations.
Keith Appleton, an STCU financial educator, acknowledges being thrifty. But when he leads teen workshops, Appleton talks about the enjoyment he gets from the high-end mountain bike that was a "want," not a "need."
"There was no guilt involved in that purchase," Appleton says. "I set a goal and had a plan to achieve it, and had months of anticipation before I actually bought the bike."