Parenting Pointers: Money Confident Kids

I know I have posted a lot of different tips on teaching kids finances, but it's always a good idea to keep it in mind, since kids pick up a lot from their parents. I had the chance to interview Stuart Ritter of T. Rowe Price about some things parents can do to instill good habits early on.

1)            It's kind of a scary stat that 97% of people learn money habits from their parents. What can parents do if they realize they aren't passing good financial habits on to their kids?

Most kids learn most things from watching their parents.  And it's okay that we're not perfect - so don't let perfection become a reason you're not talking to your kids about money.  Most of us don't know how gear ratios work in a transmission, but we can drive a car.  Don't think you need to know how a Price to Earnings ratio works before you can discuss money with your kids.  Talk about the basics.  Explain how you set and prioritize goals, how you make saving and spending decisions related to those goals.  Use the MoneyConfidentKids.com website to get more ideas about what to talk about, when, and how.  All of those will let you 'up your game' in passing along good financial habits to your kids.

2) How young can kids grasp the concept of a long-term financial goal?

Younger than you think.  Even in Kindergarten, kids are already hearing about college, so that's the perfect time to start talking about it as a financial goal - and what your family is doing to achieve it (like whether you're saving for it and what you've decided not to buy so you can save for it).  Even at that young age, it's helpful for kids to hear that long-term goals are part of the families priorities.
3) Besides online games, what are some other ways parents can make financial lessons fun?

At the MoneyConfidentKids.com website, we also have a downloadable booklet, an app, hands-on activities for parents to do with the kids and fun tips to help parents talk to their kids.  Parents can also make money lessons more accessible by using everyday teachable moments instead of conducting a formal, sit-down lecture.  At the ATM machine, when you get a paycheck, and when you pay a bill are all opportunities to talk about what your goals are, as well as how money works - without it being a drawn-out, boring lecture.
4) My parents had me involved in paying bills and knowing what their income/expenses were by the time I was in high school. What are your thoughts about kids having that much awareness of the family budget?

Each family needs to decide how much detail they want to share with their kids.  But it doesn't require sharing Mom and Dad's W-2 details to impart financial wisdom to your kids (so don't shy away from all money conversations even if you want to avoid getting into your salary details).  You can still talk about setting goals, saving and spending wisely, inflation, asset allocation, diversification - lots of topics - and it's those conversations that will help your kids understand better how to ultimately make their own good financial decisions.
5) How can parents get over their discomfort of talking about money with their kids - or each other?

Games help.  Have your kids play The Great Piggy Bank Adventure at MoneyConfidentKids.com.  It will make it much easier to talk about these topics once your kids have that experience (I've talked with my 5- and 8-year-olds about topics as sophisticated as diversification because they've played the game).  You can also find other resources for parents at the website that can help them talk with their kids about money matters.  These resources can help parents become confident about key financial topics and make it easier to have good discussions with their kids.  At the end of the day, money is just a proxy for the priorities and tradeoffs we're all willing to make.  Which means communication - with our kids or with each other - is the key to success.  

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