When it comes to managing household finances, making it a family affair can offer two meaningful benefits: instilling solid money habits early for your little ones and helping everyone in the family understand what you might be saving for and why.
Still, talking to kids about money is easier said than done, right? Check out the tips below to get the conversation going.
#1 Identify your family’s financial values.
One of the first questions a financial planner will ask is, “What do you value most?" Establishing what gives you the most fulfillment will help you align the way you are saving and spending with what truly adds value to your life.
Here are some examples to help you determine your values:
Having a safe and comfortable home
Spending quality time with each other
Helping your community and giving back
Getting a great education
Staying healthy and active
Once your family has decided on its values, write them down in order of importance and put the list somewhere visible. This will help your kids understand why the family is making certain financial decisions or prioritizing things in a certain order.
#2 Talk about how you spend money as a family and whether it aligns with your values.
Log into your bank account or download your latest credit card statement. Isolate the last 30-60 days or so in your family's spending and look at where the most money went.
Next, get everyone involved in aligning the purchases with your family's values — some of the recent spending may not fit (for example, splurging on food delivery). Talk about which categories do and don't line up with the family values you prioritized in Step #1.
#3 Set family savings (and spending) goals.
Ask your kids what personal financial goals they'd like to achieve over the next few months or year, and refer back to family values, if necessary.
Seeing is believing – especially when it comes to saving. This is where a useful tool like Ally Bank Savings Account buckets can come in handy. The account holder can create up to 30 different buckets within their savings account. You can also decide as a family what to name a family vacation bucket, summer camp bucket or even a bucket for a new pet.
#4 Teach financial resiliency along with financial literacy.
Keeping food on the table and a roof over your family takes priority over savings goals. But if you're going through a financial struggle, how much should you share with your kids?
It's every parent's choice how much detail to give kids about money issues the family might be weathering. Sharing how the family is going to make ends meet in the face of adversity could help teach children how to tackle obstacles, recalibrate and find creative ways to bounce back.
#5 Teach older kids about investing.
Once your kids have a grasp of saving and spending, it could be time to branch into other financial topics. This could mean starting a conversation about investing. Talk about the potential benefits and risks, and share how investing early could help that investment grow over time. Consider using this time as an opportunity to add funds to a brokerage account like Ally Invest. With an Ally Invest custodial IRA, parents can manage the account until the child is 18 or 21 years old (depending on state laws).
#6 Celebrate the wins every step of the way.
Use a poster board or cardboard to make regularly tracking your goals a family event. Place your visual tracker in a place where the family typically gathers like the kitchen. Cheer one another on for clever ways you've managed to trim expenses or bring in additional income to help support the family's goals.