Starting new habits in January for a better year is great, if you know where you need to start. When it comes to finances, statistics show that most Americans — kids and adults alike — don’t know where to start when it comes to making better financial choices. One in five U.S. teens lack basic financial literacy skills. Adults are plagued by trillions of dollars in student loan debt and credit card debt to the point that 40% of adults wouldn’t be able to cover a $400 emergency expense without selling something or borrowing money.
There are daily opportunities for parents to initiate societal change and teach their children responsible money management skills. Even if personal finance is taught at a child’s school, the money habits of parents and the discussions that families have about finances can be more impactful because they are real world and last more than a semester. In order to start 2020 on the right financial foot, it is important to first understand where you and your kids stand financially — both literally and conceptually — then you can create steps to improve.
1. Do a Financial Wellness Checkup
Start by taking a look at your finances, and your kids finances, and setting goals. If you have debt, where can you cut unnecessary spending to pay it down? Have your kids help with ideas and have an open conversation with them about why paying down debt is important. Also, determine where your family can set aside money for savings. If your kids do not have savings accounts, set them up and establish a strategy for saving a percentage of earnings from chores, holiday cash gifts and odd jobs like babysitting or lawn mowing.
2. Put the Kids to Work
When your kids are too young to have a real job outside the home, hire them to do work around the house. You can cut household expenses by eliminating lawn services, house cleaning services, etc. and putting the kids in charge instead. Discuss work expectations with them and set what must be accomplished each week. At the end of the week, if the work is completed to the standards you agreed upon, give your kids their first “paycheck.” Help them strategize on how to responsibly divide earnings up for spending, saving, donating and investing.
3. Discuss Tough Financial Decisions Openly
While it might feel awkward at first, discuss tough financial decisions with your kids openly. This gives them an opportunity to learn that money does not always come easily and that unexpected expenditures are going to pop up in life. Have them contribute ideas on how to adjust the family budget and work together toward overcoming the setback so you can keep finances on track.
4. Save Together for Something Fun
Finances do not have to be all about problems. They can and should be engaging for kids to learn about because this will affect how they view finances later in life. Create a fun learning environment by setting a family savings goal. Choose something together that will benefit the entire family like a special dinner out, a trip or something new for your home that everyone will enjoy. Everyone can contribute to saving for the item and it can be a celebration when the goal is achieved, and everyone’s hard work pays off.
Improving financial health is like setting a fitness goal for the new year. Achieving the goal will take dedication and it will not always be easy. But if you have a plan and stick to it, the rewards will be worth it.
— By Gregg Murset, co-founder & CEO of BusyKid and inventor of My Job Chart. A father of six, Gregg is a certified financial planner and consultant who also became a leading advocate for sound parenting, child accountability and financial literacy. Murset is considered a pillar of his Arizona community and is regularly attending his kids sporting events or taking them on weekend camping trips.