1. Find ways to make money feel real — not abstract
In our digital era, it's possible to live indefinitely without touching cash. Even when cash was common, money was still an abstract concept. The problem is, it's hard for children (or anyone, really) to be responsible with something they don't really understand. What to do? Use these tips to help your children wrap their minds around the reality of money.
2. Ask for their help in creating a family budget
Creating a budget can be a fun exercise in problem-solving; it's also a positive way to spend time together ... providing your children with financial savvy, as well as quality time. For older children, use a pencil and paper, a spreadsheet, or money-management software that tracks your spending. If they're younger, use something more tactile, like pennies or beans. Each bean should count for a consistent dollar amount. By creating different piles for different needs, you can communicate the basics of budgeting: how much you have, what you're obligated to spend, what's left over and how to allocate it.
3. Protect their future with life insurance
At an age when a summer feels like forever, it's hard for children, even young adults, to recognize the importance of planning for their future. When you buy life insurance, you help ensure your kids will have the resources they'll need down the road, in moments they can't yet comprehend.
4. Help them evaluate priorities
Think about priorities as concentric circles, with the innermost circle being your family's most basic necessities like a roof over your head, or the shoes on your feet. What else matters? What other circles might you draw around that one, and in which order? Visualizing priorities in this way can help your children reason for themselves about what's important to them, and where it makes sense for them to put their money. Are they passionate about a particular hobby? Does that hobby take more or less priority than a long-term goal? Rather than looking for right or wrong answers, emphasize how people's priorities influence their family budget choices - and their futures.
5. Model your values and be smart about giving
Do you donate to causes that are important to you? Do you want your children to help others as well as themselves? Tell them about the charities you give to, and when choosing where to give, involve them. Whom does the organization help? Is it legit? How important is its mission to you? By involving your children in questions like these, you communicate the importance of philanthropy ... and make it more likely that your children will choose to give in turn.
Want to give your children a brighter future? Give them a healthy relationship with their finances. That's not the only thing that matters — but it matters a lot.