How will your kids learn about money, how to get it, save it, spend it, manage it if they inherit it? Not talking about these topics can leave kids uninformed and unprepared for the responsibilities that come with money.
At some point in the 20th century, maybe about 1988, it became okay to talk about money with your kids. Before that time, many young people (ours included) had no idea how much money the family had, what investing was, and what it meant for their futures. Thankfully, that has changed. If you haven’t had that first money conversation with your children yet, it’s officially okay to do so. And very important too. Now is never too early.
Fortunately kids are curious and their questions can help guide the discussions. Children are naturally economists and are fascinated with “things” at an early age. It’s a simple step to turn candy and money into a basic spending versus saving talk.
Farther down the road, in Massachusetts, a child can be legally employed at age 14. That introduces topics like hourly wages, savings accounts, taxes, debit cards, Roth IRA, and so on. Daughter Victoria is learning these lessons right now and has become suddenly much more conservative in her spending habits since that first job last summer. She also asked me, “What is indexing?” Good start.
Add the advisor
We feel strongly that a good investment advisor can be a big help in these discussions, both as a source of accurate information and as an unbiased voice of reason when sensitive subjects arise. Have them meet with your kids. Again, early is not too soon.
Here’s a starter set of questions, far from exhaustive, that you and your advisor should be ready to discuss with your children. Age is not so important here as some kids are more interested than others and some progress at different speeds.
- How do I get a job?
- Can I spend all the money I earn?
- Do I really have to pay taxes?
- How much should I save?
- Where do I put the money I save?
- Are we rich?
- What do I say when someone asks me if we are rich?
- How much money do we (the family) have? Where is it?
- Why did you spend that money (house, vacation, car)?
- Can I have a credit card? (Why not?)
- Will I get some or all of your money? When?
- What should I do with it?
- Who’s paying for college? How much is it?
- How much can I afford to pay in rent?
- Can I afford to buy a car? How much?
We encourage clients to have their children, even as grown adults, meet with us to discuss financial issues – big, small, and especially, personal. We’re honored to act as experienced counselor to family members. The conversations are always interesting, educational, and sure to stimulate lots of discussion at home.
Osbon Capital is a multi-generational firm built for clients focused on multi-generational personal, financial and business success. Let us know if there are money topics with your kids you’d like to talk about.
John Osbon – firstname.lastname@example.org