Start now to raise money-savvy kids

All parents want their kids to grow up to be financially responsible adults. We want our kids to learn how to live within a budget, to avoid credit card debt, and to understand the concept of “not keeping up with the Joneses.”

We want our kids to be happy. We want them to find a career they enjoy, and to learn the importance of giving back to our community and to others who are less fortunate.

In September and October 2017, I wrote a two-part article titled “Stages: Wise Financial Strategies for Every Stage from Age 3 to 103” for the Albuquerque Journal. You can access it with the following link http:// joyoffinancialsecurity. com/stages/. Today’s article will take the next step and focus on how to initiate conversations with your kids about money.

In my 20 years as a financial planner, I have noticed that people rarely talk about money with their kids. I think there are many reasons. First, money tends to be a hushhush subject. Money is powerful in our society, and it triggers many emotions.

In my view, one of the major reasons people do not talk with their kids about money is because they feel they can only discuss it if they are financially successful — 100 percent of the time. People are embarrassed to admit they have made financial mistakes. Yet everyone has made errors when it comes to money, and that is precisely what our kids need to hear.

I recommend that parents (and grandparents, too) start a conversation with their child about money. Start by telling them about your mistakes.

Use “I” comments, such as “I made lots of mistakes over the years. Here are some examples: I only saved my money in a bank account so it had limited growth; I invested too much money in one stock, and it plummeted in value; I did not take advantage of the 401k my employer provided, so I am behind on saving for retirement; I ran up credit card debt; I bought a house that was more than I could afford.”

Tell your child that you are sharing these mistakes so they can learn from your experience and not repeat them.

Note that the reason I am recommending you start your sentences with “I” is because you are using yourself as an example, and you are not using a statement that will lead to an argument, such as “You cannot stay within a budget.” Using “I” is always less confrontational.

Clichés are perfectly fine in financial discussions. I will never forget my father telling me to “save for a rainy day” and “money does not grow on trees.”

Tell your children about your successes, too. Tell them how hard you have worked to save money for your retirement. Tell them how you learned about investing. Tell them that saving is the way to become wealthy. Tell them they should start saving as soon as they have a parttime job as a teenager, and they should aim to save 15 percent to 20 percent of their pre-tax income.

If you have examples of long-term savings, share those. My grandmother saved money for many years so my sister and I could attend college. She lived a very frugal life, but she was doggedly determined to save for our college educations.

My grandmother is an inspiration to me, and it is a classic example of saving for a long-term goal. We need to teach our kids how to avoid immediate gratification, so if you have a story, share it.

Start talking with your kids (and grandkids) about money. Share your mistakes and your successes. What have you learned over the years about money? Opening the conversation is always wise, and it can lead to many other topics. What jobs did you like best? If you went to college, what did you learn? What do you recommend to your child or grandchild about college and careers?

By starting these conversations, you are becoming a financial role model in the eyes of your child or grandchild, and that’s a role where everyone benefits!

Donna Skeels Cygan, CFP, MBA is the owner of Sage Future Financial, LLC. www. sagefuture.com, www. joyoffinancialsecurity.com.