According to a recent study by the National Endowment for Financial Education that tracked factors that help young adults avoid financial problems as they enter adulthood, two of the three biggest and most positive influences of people who did not demonstrate risky financial behavior involved simply talking to your kids about money.
“Parent involvement” made “adulting” more successful, as did taking a course in financial education and having a part-time job.
For parents, this is great news. Talk to your kids about money – out loud and often. Walk them through your money decisions. Explain how you decide to spend your money, when you budget for an expense and how, who are you donating money to and what kind of investments you are making and why.
Talk to your kids in an age-appropriate way. Keep it simple and informal. Dinnertime table talk is great for this kind of exchange. Start the conversation with a money mistake you made – in other words, a story about money – to get their attention and keep it until you have gotten the conversation going.
Take a look at our books for kids on money. For the youngest, our Money Savvy Kids Club book series helps you address a number of money topics as complex as compound savings. O.M.G. Official Money Guide for Teenagers and our newest book, O.M.G. Official Money Guide for College Students, will give you an abundance of material for those conversations. Then, hand off the book to your child to continue the learning.