Debt Free Living Families – Teach Debt Free Living as a Family Value!
This is a sponsored guest post written by Freedom Debt Relief.
Freedom Debt Relief has found that the majority of Americans find talking about money to be a particularly stressful activity- according to a survey by the American Psychological Association, “money” tops the list of topics that Americans try to avoid in conversation. However, although the majority of Americans are stressing out about money, research also suggests that a large percentage are also suffering in silence; 36% said that they’re uncomfortable speaking about money with their family members, and 18% even labeled financial conversation a “taboo” in their home.
Freedom Debt Relief believes that this type of hush-hush attitude surrounding money is a problem- especially in households with children. By treating money as a topic that shouldn’t be discussed, children are more likely to carry their family’s financial stress with them, and may be less likely to develop healthy financial habits themselves. By talking with your children about financial goals or spending habits, you can help your kids become smart consumers as they grow up. Here are a few top tips Freedom Debt Relief recommends for introducing children to family finances and making smart spending a family value.
1) Save together towards a goal. An excellent and appropriate way for parents to open a dialogue about spending with kids of any age is to help them visualize saving towards a family goal. Let kids have a hand in choosing a larger financial goal (for example, a new family computer or a trip to the beach), and calculate together how much money you’ll need to save in order to obtain your goal. Then, help kids see visually how much they are saving by getting a big jar and periodically putting money towards your goal. This simple strategy allows children to track the time that it takes to reach a larger purchase, and helps them to understand that money is a finite resource.
2) Use allowance as a tool. Freedom Debt Relief has found that another excellent way to help children understand finances is to use their allowance as a tool to help understand the concepts of interest, saving, and spending habits. Many parents allow their children to earn money on a weekly basis by helping out with everyday chores or bringing home good grades and reports from school. Parents are encouraged to purchase a multi-section bank, and have their child split their allowance into a few different sections. The first section can be labeled “spending,” and the child is allowed to spend this money at their leisure- however, once it’s gone, it’s gone. The second section, labeled “savings,” can be dedicated to a larger purchase that the child wants to make- for example, a new bike or cell phone. The final section can be titled “charity;” allow your little one to research a cause that they are passionate about (like your local church or feeding the homeless) and encourage him or her to donate a portion of their money to help those who are less fortunate.
Splitting the allowance into sections allows parents to help their children understand that their money can go towards multiple goals at once, and encourages children to forgo impulsive purchases in order to work towards a larger goal. When your child becomes a teen, you can also help them open a savings account with their local bank or credit union, which will allow you to introduce them to the concept of earning interest on their money.
3) Don’t be afraid to ask for help. If your family is in serious debt or money trouble, Freedom Debt Relief urges parents to seek assistance from a trusted debt relief or financial advising service. Doing so early will help alleviate money concerns by making a plan to tackle debt or credit issues, which will lead to lower family stress when it comes to financial planning and talking about money.
What about you? What are your tips on teaching your kids about money and how to make it a family conversation? Let us know in the comments!