Having the money talk with your kids and starting them on the road to financial fitness at an early age may be more important than first thought. Some child development experts now believe that children start learning money lessons at around age 5, a time when many parents think their kids are pretty sophisticated about electronics, but not quite up to navigating the minefield of money management.
Long before your kids begin asking money questions, they're already watching the way you handle the family finances. The money lessons they learn from watching you will help form the basis for their attitudes about handling financial matters -- possibly for a lifetime. It turns out that talking to your kids about money should be a multistep process that starts with setting a good example.
This can be good news and bad news. If you like to take a creative approach to money management with regular forays into overspending on indulgences, you'll be at risk for passing those spendthrift habits on to your children. If you're careful about money, you'll be leading by example and showing your kids real life lessons they can develop into their own strategies for financial success. By following your lead, they'll learn about budgeting, delaying gratification in order to save for the future, and using coupons and other saving methods to get the best bargains for the goods they do buy.
When the day finally comes to talk about money matters with your kids, hopefully they'll already have learned some solid lessons from the example you've set. If you've been shielding your kids from the financial realities of life in order to give them a few carefree years, now may be the time to start running the numbers with them. The more they understand, the more confident they'll begin to feel about a topic that already interests them to one degree or another.
On the next page, we'll take a look at some common sense strategies for broaching the topic of dollars and cents with your children. These days there are tools that offer a kids eye view of the world of saving. Encouraging your child to use one can make the money talk almost fun.