Posted on May 21, 2012 @reaction_admin@

It’s never too soon to start teaching your children about finances. It can be hard to talk to your kids about money, you may have to admit your own mistake, and will have to inject a bit of reality into their perspective on life. But as personal finance continues to get more difficult, it is more important than ever that you talk to your kids about finances early and often.

The first thing you should talk about it work and money. You should do this long before your child even has a checking account. Establishing the idea that you only spend money that you have and that you have to work for it, goes a long way in establishing fiscal responsibility within your child. Turn everyday activities into teachable moments. When you go shopping talk about comparing prices, looking for good deals, and how prices go up and down. If you drop by the ATM, explain that you have to put money into the machine in order to take it out. When you pay your bills talk about how credit cards work and about debt and interest. Ass your children get older talk about the importance of insurance and it’s costs. If you’re having an especially difficult time getting the conversation started consider online resources such as You should also teach your children about giving back. Get them involved in the process of donating to charity, allow them to choose who you give to.

Encourage your children to work for money. Working can teach your child valuable life lessons. Even if your kid is too young to work, set up an allowance system in which they have to complete certain tasks in order to receive money. Create a budget for the things your provide. Make categories such as clothing and electronics, and allow them to decide whether you spend or save for higher quality items. Set up a checking and savings account and reward them for saving.

Once your child gets their first full time job begin to teach them about basic investing and retirement. It’s never too soon to start saving for a retirement and investing, and it will help them to learn how to slice up their pay check. Teach them about how to make the most of their benefits package.

There are a few things you should avoid doing. Don’t allow yourself to become their lifeline. If your child overdrafts or overspends, they’ll learn from their mistakes while undergoing little to no harm. If they are damaging their credit however you may want to step in and help them out. Don’t set their financial goals for them, let them determine their own goals, it’s the only way they’ll learn to stay disciplined.

In short, the sooner you start teaching your children how to be fiscally responsible the more likely it is that it will become a part of how they manage their finances. Continue to advise them on their finances as they take on a job and begin to think about saving and investing. At the same time don’t be too controlling, remain an adviser not a manipulator.

Robert Boroff Executive Profile Managing Director Reaction Search International

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