A significant aspect of teaching your kids about money is considering your own role in their financial learning experience. While many factors combine to shape your child’s outlook on money and overall financial literacy, one of the most influential aspects is watching how you and other significant adults deal with financial matters. Establishing a pattern of healthy financial parenting and being a strong role model during their formative years will help your kids to develop a positive approach to money that’ll stand them in good stead later in life.Here are tips on how to be a strong financial parent and how to go about managing any parental differences you might face.
Understand Your Own Outlook on Money
First, consider how you approach money:
• Do you worry about money?
• Perhaps you’re an over-spender?
• Are you a successful saver?
Understanding the positive and negative aspects of how you deal with your own finances is the first step to healthy financial parenting. Of course, it can also help to secure your own financial future. Coupled with a dynamic financial plan, sensible spending and diligent saving habits can help you prepare for many of life’s planned (and unplanned) events, and can teach your kids to do the same.
Understand How Parental Differences Impact Your Child’s Outlook on Money
If you’re half of a couple, you also need to take into account your partner’s money perspective and how it interacts with your own when formulating a strategy for healthy financial parenting..
Even in financial matters, opposites often attract, and you may need to manage parental differences towards money. With careful consideration, however, opposing views can be leveraged into a balanced approach to finances that will provide your kids with a strong financial role model they can emulate.
Financial points to bear in mind when you’re part of a couple include:
• Acknowledge and find value in each other’s similarities and differences when it comes to finances.
o Delve into the ‘why’ of how your partner relates to money.
o Ask about your partner’s financial upbringing to gain insight into his or her adulthood financial perspectives.
• Communicate openly and honestly about all things financial.
• Find common financial ground to build upon together.
• Incorporate both shared and individual goals into your financial planning, so that both of you feel represented.
• Ensure that you’re both actively and equally engaged in your family finances. Shared responsibility ensures both partners are equal and empowered.
• Challenge accepted gender stereotypes of financial behavior i.e., that men are the bread winners and women are the caregivers.
• Maintain a united front that reflects and reinforces your family’s life and financial principles and values to your kids.
Financial Parenting After Divorce or Separation
Where families are divided, managing parental differences and maintaining a unified approach to teaching your kids about finances can be much harder.
Hopefully, you’re able to communicate amicably with your ex. This helps preserve healthy financial parenting for the benefit of your kids.
However, it’s not unusual for parents who are separated or divorced to try and ‘buy’ affection, or assuage guilt they may feel about a marriage break-up, by treating their kids to toys, meals, or other experiences.
• If you’re the parent doing the treating, take a pause and remember how influential your financial behavior is to your kids during childhood. Makes sure you model sound money management skills and wise financial decisions.
• If you’re trying to be a good money role model , but feel undermined by an ex’s financial splurges, discuss the behavior with your ex so that you can agree on a coordinated approach to teaching your kids about financial literacy.
• If discussion isn’t possible, or you can’t reach a shared point of view, remain a strong financial parent yourself. Model sensible money management skills, wealth-wise planning and decisions, and, most importantly, continue to re-iterate your family’s core beliefs and values about money and life in general. Your kids might not vocalize it now, but your presence in their lives is far more important than any possessions you might buy. Stay focused on what matters most, both now and in the long-run.
Financial literacy is a focus of SageVest Wealth Management, the fee-only financial planning and investment management firm behind SageVest Kids. SageVest offers customized, comprehensive wealth management to individuals, families, and business owners throughout the DC Metro area and nationwide. Please contact us to discuss how we can help you develop financial goals, dialogues, and plans that support your individual and shared life objectives.