College students' financial education begins long before they set foot on campus—just ask Mary Ann Campbell. Now a financial educator, she vividly recalls her parents implying that because she was a girl, sending her to college was a waste of money. She was so affected by that message that she made a career out of studying how we learn about money.
Not only did she figure out a way to pay for college, but she also earned a Ph.D., wrote her dissertation on how money attitudes are passed on between generations, and became a certified financial planner.
Numerous studies, including Campbell's research, have shown that parents exert an inordinate influence on their children's future money habits. And yet, even though most parents say they consider themselves responsible for their children's financial education, only one in three call themselves "excellent" financial role models, according to a recent ING Direct survey.
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Some parents avoid talking about money because they feel so uncomfortable with the subject. In fact, the ING Direct study found that parents feel more prepared to discuss drugs, alcohol, and sex than finances. Luckily, parents don't need to invent their own lesson plans; Mymoney.gov, AmericaSaves.org, ING Direct's Planet Orange, and SchwabMoneyWise.com are just a few examples of family-friendly websites that make it easier to talk cash around the kitchen table.
ING Direct CEO Arkadi Kuhlmann also recommends finding inspiration in daily activities: Grocery shopping, buying new clothes, and even making dinner can lead to a conversation about frugal choices and budgeting.
But the money talk need not dwell on the limits and restrictions of money. In fact, money expert Susan Beacham, cofounder of the company Money Savvy Generation, recommends focusing on joint family goals, such as taking a vacation to the beach or getting a pet hamster.
She designed a personal finance organizer for teens that includes a budgeting workbook as well as pouches for saving, spending, donating, and investing. The organizer also helps high school students track their goals and decide on financial priorities. "You're teaching them to stop, pause, and reflect, and this is the first step toward teaching them to delay gratification," Beacham says.
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Alisa Weinstein, author of Earn It, Learn It: Teach Your Child the Value of Money, Work, and Time Well Spent, also recommends turning an allowance into a teaching—and enjoyable—moment. Instead of simply doling out cash each week, she says children can learn to connect earning money to future careers by performing job-related tasks in order to get their allowance. For example, a child interested in travel could fulfill travel agent tasks by learning about a specific destination and then writing a brochure on it.
"This way, the child is making the connection between effort and money, and the feeling that you worked hard for something. If you can capture that, then you're much more likely to have a child who grows up and can find emotional and financial fulfillment in their careers," says Weinstein.
After you pay out the allowance, step back as they experiment with how to handle their money, especially as children get older, says Lewis Mandell, a finance professor at the University of Washington. He watched as his own daughter lost money after investing in Pepsi stock as a teenager. The lesson she learned about diversifying was worth far more than her stock losses, he says, and is one he couldn't have simply explained to her with the same impact.
The bottom line? Talking about money within a family sets the tone for a child's future financial life, but those talks don't have to be awkward—or boring.
Kimberly Palmer is the author of Generation Earn: The Young Professional's Guide to Spending, Investing, and Giving Back.
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