What are you teaching?

By Sean Gerlin, CFP®, ChFC®, CLU® 

You know your children have a lot to learn. But out of all the things you want to teach your kids (like kindness, respect, responsibility, a solid work ethic…), financial literacy should be near the top of that list. Why? Financial literacy is a skill that can make or break your child’s success as an adult, and it may not be taught in their schools.

Your kids will learn about money from someone. Don’t you want that someone to be you? If this topic seems overwhelming or you don’t know where to start, let this be your introductory guide.  

1. Be an Example

If you want your kids to grasp the importance of handling money wisely, let them watch you make financial decisions and model what you want them to learn. 

The number-one money habit children learn from their parents is spending habits—good or bad. If you spend money wisely, your kids will see that. If you work with your spouse to determine what’s a good value and what’s not, they’ll accept that behavior as the norm. The same is also true if you have unhealthy behaviors, like arguing over finances in front of your kids. Your actions set a precedent, so be intentional about how you model money management to your kids and let their watchful eyes be a motivator to encourage positive and eliminate negative financial habits.

2. Start the Conversation

Since many areas of personal finance aren’t visible, sometimes a silent model isn’t enough. That’s why it’s vital to start the conversation now. Talking to your kids about money regularly leads to kids who are more financially literate. It doesn’t have to be a long drawn-out discussion. Just let them in on your thinking and decision-making as you go about your day-to-day life. At a restaurant, explain why some food items cost more than others; at the bank, explain why the bank keeps your money and why you only take what you need from the ATM. These real-world scenarios help cement the whys and hows of money in your child’s mind. 

3. Give Them Opportunities

For financial understanding to truly sink in, kids need to experience their own successes and failures. On a practical level, give your 5-year-old money to buy something at the store so they learn the value of different items and realize that, to obtain something like a toy, an exchange of money needs to take place. Try letting your 10-year-old figure out the cost of a new video game, plus tax, and help them save up allowance money to pay for it. Let your teenager buy their back-to-school clothes with a set amount of money. 

Seeking out financial literacy classes in your area or online is another great way to introduce the topic of money management to your children. As they get older, you may even choose to guide them in investing some of their hard-earned money, letting them make some of the decisions. It may seem a little scary at first, but we all learn best by doing, so allowing your kids to make mistakes can teach them valuable life-long lessons.  

4. Explain Saving, Investing, and Borrowing

As your kids get older, you’ll have the opportunity to discuss more topics that will help them prepare for adult life. It doesn’t need to be anything complex either. You can explain how you save some money in a bank account for rainy days and unexpected events; other money you save can be put in things that will grow over time. To help illustrate that point, you can tell them that Disney, the company that made Toy Story and Frozen and runs Disneyland, offers small pieces of ownership in their company that anyone can buy. As the company grows and improves, your kids’ money will grow with it.

While it may be excessive to talk about all types of borrowing, it could be wise to talk about harmful debt like credit cards. With credit card debt in the U.S. currently at $925 billion (just under the all-time high), it’s clear that many Americans struggle with them. But your kids don’t need to, if they can understand how the high interest rates exceed any other investment that you could make on your own. These harmful debts keep people in a negative cycle that is hard to overcome.

5. Encourage Healthy Behaviors With Money

If your kids receive an allowance, earn money from chores, or get cash gifts from family on holidays and birthdays, that’s a great opportunity to discuss how your family behaves with money. To keep it simple, you can teach your kids that when you receive money, it has three main uses: spend, save, and give. You could even have three jars for your kids, allocated with money they receive for each one. Perhaps you want to teach them to save 10%, give away 10% to a favorite charity, and the other 80% is for them to spend on whatever they want. This simple method will show that money has multiple uses both for themselves and others.

We’re Here for You

You want what’s best for your children. Whether you’re implementing an allowance, putting money aside for college, or saving for other major milestones in your kids’ lives, you might be wondering if you’re doing an adequate job. There are countless resources out there to assist parents in teaching their kids about money—but where to start? We’d love for you to think of Envision Wealth Planners as your go-to resource for applicable and beneficial financial guidance that helps you and your children find confidence in their financial future.

Would you like to discuss how we can walk alongside you as you set your kids up for success and save for your family’s future? If so, you can schedule a no-obligation introductory phone call or reach out to me at connect@envisionplanners.com or 407.720.6535.

About Sean

Sean Gerlin is founder, principal, and a financial planner at Envision Wealth Planners, an independent financial advisory firm founded on the core values of family, honesty, and a determination to be a master of the trade. With almost 10 years of experience, Sean specializes in serving affluent families and commercial real estate executives and brokers, providing comprehensive, customized financial guidance and services for their complex financial needs. Sean acts as a family CFO, managing and coordinating the many moving pieces of his clients’ financial lives. Sean is known for his commitment to building long-term relationships and paying personal attention to each client. He is passionate about helping his clients experience the relief that comes from having organized and well-planned strategies and portfolios, and he desires to help them by shouldering some of the financial burdens they face.

Sean has a bachelor’s degree from the University of Florida and holds the CERTIFIED FINANCIAL PLANNER™, Chartered Financial Consultant®, and Chartered Life Underwriter® certifications. When he’s not working, you can find him cooking, eating good food, traveling, coaching his son’s baseball team, or playing golf. He loves spending time with his wife, Nicole, and their two kids, Avery and Will, and entertaining friends in their beautiful backyard. To learn more about Sean, connect with him on LinkedIn.

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