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5 Financial New Year’s Resolutions for Parents

January 7, 2022 | Kids Club. Share this article: Share5 Financial New Year’s Resolutions for Parents on Facebook Share 5 Financial New Year’s Resolutions for Parents on Twitter

5 Financial New Year’s Resolutions for Parents

New Year’s resolutions don’t have to be reserved for diets and exercise. Make 2022 the year you start the money conversations with your kids that will enable them to make good financial choices that lead to a healthy future and long-term financial success.

Here are five easy ways to maximize everyday teachable moments and weave money lessons into day-to-day life.

1. Talk about money with your kids. The sooner you begin talking to your children about finances, the better your chance of raising financially confident adults. Make an effort to weave money lessons into day-to-day life:

• At the grocery store, talk about why some things cost more money than others. Is it the brand name? Better ingredients? Is it an international item?

• At the mall, decide if it’s better to buy two pair of less-expensive shoes, or one pair of well-made shoes.

• Take the kids with you when you’re car shopping and let them see you negotiate the price and compare features.

• Discuss why you’re refinancing your mortgage or paying off debt.

Even if your child doesn’t completely understand—or you don’t completely understand yourself—talking openly about money and teaching critical skills and concepts will give your kids a strong foundation for their financial future.

2. Give allowance in a lump sum. The problem with giving kids a weekly or bi-weekly allowance is that it comes too often. If your child blows their money right away, they know they don’t have to wait long to get more. Giving larger sums of money less frequently can teach kids how to plan and save for future expenses, and helps develop and strengthen skills in self-restraint, learning the difference between wants and needs, and in setting goals and priorities. (Find out more about the case for lump sum allowance here: https://www.copfcu.com/how-raising-your-kids-allowance-can-actually-save-you-money)

3. Involve kids in financial decisions. One of the best ways to teach financial responsibility is to include kids in family budget planning and big spending decisions. From buying a new house to planning an activity to do as a family this weekend, all financial decisions require you to take other expenses, upcoming bills, savings needs, and other factors into consideration. Letting kids be a part of the conversation will help them experience budgeting, opportunity cost, and financial responsibility first-hand.

4. Build a family savings account. Starting a family-based savings account is a great way to learn to work together as a team and helps instill the concept of needs and wants, as well as the discipline it takes to save. To start, decide on a savings goal for the entire family—one that benefits each family member so they have a stake in it—and how to work together to make it happen. Maybe it’s a trip to an amusement park, a weekend camping trip, a summer vacation, or renovating the basement to a family game room. Research the costs as a family to determine how much you’ll need to save (this can also serve as a tie-breaker between two goals), and set up a central, visual tracker of how close you are to your goal. You’ll also need to determine where the money will come from. Will each family member contribute a set amount? Hold team events such as a yard sale? Implement cost-saving measures like going out to eat less, clipping coupons, or foregoing expensive family outings? When you achieve your goal, celebrate the occasion by buying the item together. Then, hold another meeting to establish your next family savings goal!

5. Let your kids make money mistakes. While you should discuss and advise your children on their spending, it’s important to allow them to have the final say in the process. If you force them to save their money, they’ll miss out on some very valuable lessons about opportunity cost, wants and needs, and anticipating future expenses. Instead, let them figure out real-world solutions when they mess up, such as taking on babysitting jobs, mowing lawns in the neighborhood, or doing extra chores to earn money. Your child will make bad money choices often, and you should cheer when they do—internally, at least. Most people aren’t born with an innate sense of how to manage money. Providing your child with real-life experiences in budgeting, making choices, and anticipating short- and long-term needs is an invaluable part of preparing them to make sound financial decisions and secure their economic future as adults.