This is part two of an ongoing series we’ve launched on the Insider blog on “Kids and Money.” As you prepare to send your child off to college, you should also be thinking about how to foster in them the skills necessary to build financial independence. In this series, we’re discussing how students can earn, spend, save, borrow, and protect their money in a way that aligns with personal and family values. Type “Kids and Money” into our Search Box to find all installments of the series.
School is out, the sun is shining, and the temperature has finally caught up to the season. Summer is here! And that means family vacations and staycations are in full swing. A few weeks ago, we wrote about helping your child secure a summer job, and while learning to work and save are crucial milestones for young people to achieve, being encouraged to dream and allowed to spend are equally important. So how do parents instill the right work/life balance within the children?
- Dream Big. While lazing around with your children at some point this summer, ask: if they had all the money in the world, what would they do with it? How would they spend it? Encourage younger children to capture it in words or pictures: have pen and paper handy, or a tablet, and have them sketch it out. Make it fun.
- Talk About What You See. Without recognizing it, your children will be sharing their personal values with you. What are some of the common themes? Are they talking about giving, spending time with friends, material things, adventures, expressing themselves through art or religion, independence, acquiring knowledge…? There is no right or wrong answer; you are simply encouraging self-expression and talking about the values you see.
- Prioritize & Plan. Once they have shared a good amount of spending ideas, ask them to rank them in the order of importance. If you could only do or buy one of those things, what would it be? What if you were allowed two? Or three? Add a revolving limit, like $100 per month, to their money now and encourage conversation around how they would divide and achieve each dream. If they received a certain amount for allowance or through wages, would they save for all three at once or one at a time? You can build on to the conversation by involving simple math and planning for how long it would take to achieve each one.
Within this 3-step activity, you just laid the groundwork for creating a simple spending plan that is dictated by personal values. All too often, we as adults can get caught up in the operational functions, details, and—dare I say it—stress of tracking expenses and managing a budget that we forget why we are doing it in the first place. The better your children become at dreaming and prioritizing those dreams, the more natural controlling money and managing spending decisions becomes.