5 Reasons It Is Smart To Talk To Your Children About Household Income
I just came across an article on MSN.com about sharing with your children on the subject of household income. This is something I (@MtgMaestro) as a new father strongly believe in. Why you may ask? Well as a mortgage banker I deal with household income everyday. More often than not it is not ours. But I am asked the questions; “How much do we qualify for?”
This article struck a nerve because I too often see folks who can’t qualify for a house because of lack of knowledge about budgeting and credit. So I agree, talk to your kids at an early age about money. It is ok for them to know. We also live in an age where so much information is available to them online, even if by accident. Here are a few good reasons to share with them about your household income.
1) – Teach them the value of a dollar– If they learn why when you work, money goes to things like taxes, savings, bills, mortgages and such they will learn at a younger age that a dollar only goes so far. The article has a great piece about a father that took money out of the bank, and showed the kids where it goes.
2) – Shielding them from the reality of money can cost them later – If your kids learn what it costs to live, then later in life they will know. As I always say, in college you can have a weekend of fun and pay for it for years (I.e charging up items on a credit card). As they grow show them what it costs to pay things back. Meaning teach them what interest costs, and how long it can take to make up from impulse buying.
3) – They will learn the differences between necessities and wants – If you show them that buying that toy, or how the pizza night effects the budget they will learn what it can take away from. Simple things like; Hey guys we can do this, but it will take longer to save for the beach. If they ask how? Talk to them about it. If education is important and your kids go to private school teach them that it is not free. They will likely appreciate more that you are paying so they have that opportunity. The same can be said about little league or gymnastics and such. This can really come into play as they deal with college expenses and taking out student loans.
4) – They won’t feel as deprived – Now that sounds odd. But think about it. When you are not a part of the decision making process you feel deprived. You may say, but they are children…. If they understand over time why something has to be skipped, or why it took a few years to go on vacation then they will be less likely to feel deprived. They may not feel as inferior as well. Empower your children and you may be surprised how it helps shape them.
5) – If you are well off you can “ground” your children – Showing these kiddos that there are responsibilities that come with wealth is important. Learning how to maintain or grow wealth. Meaning, if the money won’t last if they don’t do something after college will help motivate them. Teach them the costs of that vacation home. If you have to fly there, hire a car, go to dinners, and pay for entertainment while on vacation it can teach them that it isn’t free. Teach them the value of giving. Show them how impactful helping those less fortunate can be. I like to pay it forward, so you better believe our daughter will learn what this means. And to pay it forward you don’t have to have money!
The article is a good one and worth the read, check it out on MSN.com