Written by Sally Bernard

You think that your children won’t notice that mounting debt and empty retirement account? Think again. According to a survey by the American Savings Education Council, 94 percent of children ranked their parents as their primary financial educators.

Children really pick up financial literacy from their parents and that’s a scary thing considering where our county is right now with the savings rate at an all time low.

One of the most important things parents can do is teach their kids good money management skills and model those skills themselves.

1. Differentiate between needs and wants.

The first lesson is often the hardest. Before you take your child to the “big box store” to make a purchase with all of the money they have earned with the summer job. Set down with them and ask them if this item is a “want” or a “need”? Ask them the questions. What are going to do with this item? How much money will you have left after the purchase? Do you have any other expenses coming up that you need money for? After you and your child have put this item through the thought process ask them again is this a “want” or a “need”?

2. Share the secrets of saving.

The major thing we can teach our children is saving. Personal savings are the key to a car, college, retirement, homeownership and anything else in your financial future. Personal savings rates in the United States have declined significantly in the past 20 years. One of the largest reasons for this is lack of awareness. The only thing kids see us do with money is spend it. They don’t see us save, they don’t see us give to charity, and they don’t see us pay bills, so it’s essential to involve them in the rest of the process. Let them sit down with you when you pay bills. Show them how much it costs to live and how much money is left for savings. They will be shocked at first, but after a while they will ask what they can do to help save.

3. Instill smart spending habits.

Perhaps the reason most parents don’t discuss their spending choices with their children is because they’re not making the right ones themselves. A survey done by Alliance Bernstien investment firm found that more than half of all parents spent more on dining out in the past year than they did on saving for college. Let your kids make a few poor purchasing decisions early on to understand how to avoid making big mistakes later. All goes back to the “want” or “need” thought process.

4. Keep out of credit quicksand.

Want to keep your kids out of debt? Teach them about the cost of credit long before they’re old enough to carry plastic. A lot of parents will say “I’ve messed up my credit! How can I possibly talk to my kids?” But that’s the whole point! With our children we get a do over and teach them from our mistakes.


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Sally Bernard

Sally Bernard graduated from the University of Nebraska at Kearney and earned a bachelors degree in consumer science with an emphasis in business. In 1993, Sally started a new career in banking. Several years later, she joined Advantage Financial Group to help grow the family business and enjoy the freedom to spend more time with her family. She is licensed in debt management and finds great pleasure helping families turn debt in to equity. If you are looking for expert services in mortgages or debt management, give Sally a call.