‘Back to School’ means fi­nan­cial ed­u­ca­tion for all

New Haven Register (Sunday) (New Haven, CT) - - BUSINESS - JOSEPH MATTHEWS Joseph Matthews is a Fi­nan­cial Ad­vi­sor with the Wealth Man­age­ment Di­vi­sion of Mor­gan Stan­ley in Fair­field. He can be reached at 203-319-5165 or by email at joseph.matthews@mor­ganstan­ley.com. Fol­low Joe on Twit­ter @jmatthewsMS.

Au­tumn is well un­der­way, and for mil­lions of stu­dents that means the first set of ex­ams — and par­ent-teacher in­ter­views — is just around the cor­ner. This is a per­fect re­minder that ed­u­ca­tion around fi­nances needs to be ad­dressed, as well.

The world of fi­nance is see­ing shifts brought on by tech­nol­ogy that could change the way many peo­ple do busi­ness in com­ing years, and “fin­tech,” or fi­nan­cial tech­nol­ogy, is be­ing ad­dressed by many schools.

Stay­ing cur­rent with tech­no­log­i­cal ad­vances may be im­por­tant in­deed, but I be­lieve a holis­tic ap­proach to fi­nances should be a higher pri­or­ity. Fi­nan­cial ed­u­ca­tion can start early, in the home, with par­ents giv­ing sim­ple lessons. Why is it im­por­tant to have a job and earn money? What is a bank ac­count and how does it work? Should you save your money or spend it? These are very ba­sic con­cepts that are not be­ing taught in schools, yet can lay a foun­da­tion for life­long fi­nan­cial suc­cess.

Here are a few ideas to keep in mind as you con­sider teach­ing your chil­dren fi­nan­cial lessons:

Over­com­ing typ­i­cal re­luc­tance to talk about money should be an ini­tial step. Many par­ents may feel ret­i­cent about dis­cussing fi­nances with their chil­dren, but I am a firm be­liever in hav­ing open and hon­est com­mu­ni­ca­tion about fi­nances is a must.

But be­fore you be­gin teach­ing you chil­dren about fi­nances, con­sider your own val­ues about wealth: your own spend­ing habits. Spend­ing habits may be a much stronger mes­sage than what you ac­tu­ally say; for ex­am­ple, your life­style, your house, your car, and the na­ture of your va­ca­tions pro­vide your chil­dren with not-so-sub­tle clues to fam­ily wealth and could sug­gest con­spic­u­ous con­sump­tion which would prove hyp­o­crit­i­cal to the mes­sage you are try­ing to teach your chil­dren. So, as you be­gin talk­ing with your chil­dren about fi­nances, pro­vide con­text on the pur­chases you’ve made and con­tinue to make.

En­cour­age your chil­dren to for­mu­late their own opin­ions about money. For ex­am­ple, if your child asks you, “Are we rich?” you could re­spond, “Ev­ery­one has a dif­fer­ent def­i­ni­tion of what it means to be rich. What does it mean to you?” Help­ing your chil­dren think in­de­pen­dently about the real mean­ing of wealth and hap­pi­ness may lay a ground­work for their fu­ture goals.

As a gen­eral rule, con­ver­sa­tions are much more ef­fec­tive than lec­tures. The fo­cal point might be your fam­ily’s val­ues and what you as a fam­ily hope to ac­com­plish with your wealth. Is char­i­ta­ble giv­ing im­por­tant to your fam­ily? What form does it take? In­still­ing the im­por­tance of giv­ing back to the com­mu­nity at a young age can be ben­e­fi­cial.

To truly get the mes­sage across, con­sider liv­ing, not just speak­ing, your val­ues. For in­stance, if you want to teach your kids about bud­get­ing, sav­ing, and mak­ing choices about spend­ing, give them an al­lowance that they and they alone con­trol. They will quickly learn how to man­age their own money if, for ex­am­ple, they don’t have enough saved for a cov­eted pur­chase.

If you are try­ing to teach the im­por­tance of phi­lan­thropy, en­cour­age your chil­dren to find cre­ative ways to give back, per­haps through a lemon­ade stand or bake sale. Or, bring your chil­dren to vol­un­teer at a com­mu­nity or­ga­ni­za­tion, such as a soup kitchen or se­niors’ res­i­dence, and let them ex­pe­ri­ence giv­ing first­hand.

Teach­ing kids about wealth and money is an on­go­ing di­a­logue, not a one-time con­ver­sa­tion. As they grow in their re­spon­si­bil­i­ties, their pri­or­i­ties and re­la­tion­ship with money will change, as should con­ver­sa­tions about how to man­age it.

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