Being aware of money
Money is a subject that is difficult for many families. Husbands and wives may not agree about their family's financial strategies, so talking to their kids about money opens up an uncomfortable subject. Helping your children learn about money may be something you would like to leave "until they are old enough to understand." But if you wait until your children leave home for college or a job, you will put them at a big disadvantage. Living on their own means they will be taking on new responsibilities managing their expenses along with experiencing a new school or work-related pressures, all at once.
If you are hoping that they will learn about money management without your help, at school perhaps, that is unlikely. A class in personal finance used to be a graduation requirement for Oregon students - teenagers were taught about banking, saving, credit, and budgeting. Since the requirement was eliminated several years ago, only a few high schools still have this offering. Some of this content is covered during junior or senior year economics courses, but the practical, day-to-day lessons of dollars and cents may not be included.
So the responsibility to develop a good foundation in money management rests squarely on your shoulders. Your children's education about money should include the concepts of earning, spending, saving, borrowing, and sharing. But before you begin, you may want to consider these questions:
- Can our family discuss money issues openly, without conflict? What issues do we as parents need to resolve to be able to do so?
- How should our children "earn" money - through allowances or another method?
- What are our family values and attitudes about money? What do our children observe about our values and attitudes? What do we want to communicate?
- How might our children each be different with regard to handling money? How will we deal with these differences?
By learning about money, children are also given the opportunity to formulate their own values about income, life style, and work. This can be a powerful motivator in their education and career planning. As they identify their life style choices, they can connect career options that can meet their future needs. They will see that income is related to level of education, and they may make better choices about their education plans.
Money during high school
Teaching high-schoolers about banking and credit will make them savvier when they leave home for college or work. Many teens have part-time jobs and can really understand what it means to earn a living. If they are working, they most likely will be introduced to the concept of paying taxes. With a regular income, this is a good time to teach them to manage a checking account and ATM or debit card. They can be taught to save for major expenses such as their first car or education.
Even if they are not earning their own money, they can become more responsible for buying some of their own clothes and other necessities. A weekly, monthly, or seasonal allowance for these items will help them appreciate how much things cost and perhaps take better care of their belongings. They can learn to set up a budget, keep records of their expenditures, and learn about needs versus wants.
Depending upon their finances, your children can even learn about investing during this time. High schoolers are ready to be taught about the market- using real money. They can learn about interest rates, different forms of saving and investing, and benefits and risks.
During the last year or two of high school, the costs associated with your children's next steps should be discussed. If they are going to work, they need to think about where will they live, what their living expenses will be, and how much they can earn. If they are going to college, they will also need to understand how much their tuition will be, what other kinds of expenses they will have, and how these costs will be covered. If they will be taking out student loans to pay for their education, they need to understand the implications of these loans. As their parent, you need to be clear about what you will help with and what your expectations will be.
High school is the time for your children to have learned how to deposit money, write a check, use a debit card, keep track of a savings and checking account, create and stick to a budget, and make simple financial choices. Learning these things under your guidance at home is far better than dealing with financial problems when they are living away from home.