3 Money Resolutions Parents Can Share With Their Children

Every New Year seems to begin with a new commitment to change health or money habits, and marketing experts know it. Nearly every advertisement I have seen this year is pitching their product or idea as the answer to fulfilling a New Year’s resolution.  Even the financial websites have piled on with New Year budget and debt suggestions. This article is not full of quick fix suggestions because parents know that teaching their kids about money is an every year resolution.

Bill Cosby had a knack for using parenting moments to entertain us. One of my favorite clips is this one. As you can see, Cosby was his classic self, although it was Theo that nailed the scene. Theo’s humorous depiction of money ignorance is not uncommon for a teenager, yet most schools send kids into the working world without a course that teaches them how to manage their money. As you can read here, I have a real problem with that. Regardless of whether or not your children’s school is committed to financial literacy, you are responsible for providing a lifetime of money lessons for your children.

Education Week recently highlighted some very important lessons from neuroscientists. The takeaway from the article for educators and parents is that the neural pathways needed for learning are like a new path in the woods. The more frequently that a neural pathway is traveled, the fewer the obstacles, the greater its capacity, and the smoother and faster it becomes. In other words, parents cannot rely solely on one high school personal finance class to prepare their children for managing their own money, just as schools cannot count on parents to do it by themselves. It has to be a collective effort, and age appropriate content needs to be introduced and re-visited over a number of years.

My goal is to arm every parent in the country with the tools and teaching tips they need to prepare their children to manage their money wisely. To do so, I just began to co-author a book with my favorite financial education author. In the meantime, here are three teaching tips I suggest incorporating in money lessons with your kids.

Teaching Tip #1: Kids learn by doing.

When you are talking and they are listening, they might be learning. When they are experiencing and you are guiding their choices, they probably are learning. Meaningful conversations between a parent and child are typically triggered by meaningful events and experiences. Create these events and experiences by empowering them with an allowance, banking tools they need to manage their own money, and the freedom to choose how they will spend it. Take advantage of the questions they ask you when you do this. A kid’s curiosity about money peaks when the money they have to manage is their own.

Teaching Tip #2: Be up-front about the hardest part.

Most people want more then they can afford. A lot of people (and governments) spend more than they have. Do not hide this from your kids; be up-front about it. They need to understand why it is so hard to save. Children need to understand that the tools needed to manage money are not always found at the bank or in a classroom. The most important tools, coping skills and perseverance, are found within us. Teach your children how to use them.

Teaching Tip #3: Use good resources.

One of the first things I picked up on as an educator was that kids love to learn through simulations and games. This triggered the creation of my financial education game and hundreds, if not thousands, of hours researching financial education tools for my students and my own children. My kids are younger so I use MoneyTrail as their virtual online bank for their allowance and I have my students use BudgetChallenge. My wife and I both felt that MoneyTrail would allow for a smooth transition to online banking and Mint.com. I recently fell in love with the FinLitTV product. I believe they are going to revolutionize the culture of financial literacy for older children and young adults through social media. With that said, there are plenty of great resources out there.

Let this year’s resolution be an every year resolution of the determination to provide your children with the financial tools and education they need to manage their money consistently with their own values and goals.

Brian Page (@FinEdChat) is Ohio’s recipient of the 2011 Milken National Educator Award. He co-created the national financial education tabletop game of the year, Awesome Island Game and teaches Personal Finance with Reading Community City Schools.