Talking Finance With Children

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By Gioia McCarthy | Special to the NB Indy

Talking to your children isn’t always an easy thing to do. I know because I have two college-age sons, and it’s hard to even find a moment when I’ve got their undivided attention to discuss anything.

If there is one topic that parents feel like they must talk to their children about as they edge into adulthood, it’s the birds and bees. However, there is another important topic that is almost as dreaded for both parents and kids: Personal finance.

Gioia McCarthy
Gioia McCarthy

It can be awkward to bring up the word “finance” with your children. In fact, a survey showed that parents are nearly as uncomfortable talking to their children about money as they are discussing sex.  

Yet, it’s our duty to guide our children on financial topics as they reach major milestones in their lives such as getting their first job, going to college and buying a home.

As a mom and someone who works inside the financial services industry, I understand how essential it is to make time to talk to my sons about this important topic because it will impact their entire life.  

To be clear, parents are not expected to be financial experts. There are great resources and materials available to help you. For example, Bank of America has partnered with Khan Academy to develop BetterMoneyHabits.com, a free online resource that combines Khan Academy’s expertise in online learning with our financial know-how to deliver unbiased and easy-to-understand information on a wide range of personal finance topics.

However, there are ways you can jump start the conversation at home. Here are some ideas for talking about finance during key life moments where a little parental advice comes in handy.  

First Job: First jobs mean first paycheck and first big spending decision. This is the perfect time to help your teenager or young adult understand the importance of saving money and how to budget to avoid overspending. Talk to your child about needs versus wants and how to make trade-offs. If your child would like to buy a big-ticket item (new computer, new car) it can help motivate them to start saving.  

First Credit Card or Loan: The credit conversation is a tough one. The average American household carries more than $7,000 in credit card debt and nearly two-thirds of college students graduate with some form of student loan debt. Thankfully, you do not have to be an expert to talk to your children about credit, where your guidance is critical is in teaching your child to ask good questions when making financial decisions:

  • Is this purchase or loan necessary right now?
  • Do you have enough money in your budget to cover the monthly payment?
  • Does this purchase or loan affect your ability to pay for a future expense?

Asking smart questions will help your child avoid making impulsive decisions and potentially taking on too much debt.

First Home: For parents of older millennials, your children might be talking to you about purchasing their first home. Buying a home is a big purchase and one way you can help prepare your children is to have an open conversation. Help them think about the decision and answer questions like:

  • Can you afford the monthly payment?
  • Do you have enough for a down payment?
  • Do you plan to live there for at least five years?

Whether it’s talking about the birds and the bees or financial decisions, difficult conversations are essential for your children’s growth. Working in finance, I have seen what a difference these types of conversations can have on how people approach their everyday financial needs. The trick is to start early and over time, you’ll teach your children how to live healthier financial lives.

Gioia McCarthy is a Reginal Sales Executive at Bank of America based in Newport Beach.

 

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