A New ‘New Year’s Resolution’ – Talking to your Kids about Money
The Financialist • Issue 132 • January 2017
BY BRIAN MCGUIRE BA CFP
A New Year is underway and some of us have already broken our New Year’s resolutions…
I haven’t been to the gym once yet! Far too often, we set some colossal goal that is unlikely to come to fruition because it is simply unrealistic. When setting a goal, you want to choose something that is SMART – Specific, Measurable, Achievable, Realistic and Time-bound. By setting a SMART goal, you do not need to hit a home run… you are just looking to get on base.
Simple as it may seem, speaking to your kids about money – regardless of their age – is both a SMART goal and a smart goal. It is a SMART goal in that it is very specific: you can measure it by bringing it up in your routine conversa- tions that we all have… and it is definitely achievable and realistic. Making this goal time-bound is the ultimate purpose of this article.
Talking to your kids about money is a smart goal because financial literacy is not something that is currently part of any school curriculum that I have come across. A lack of knowledge in this area can lead to many difficult situations down the road.
From toddlers to seniors, in some way, we all learn from our mistakes. Although I am not yet a parent, I believe that most parents will try their best to help their
children to avoid the mistakes that they have made — “Don’t touch that, you’ll burn yourself”.
I consider myself fortunate that the conversation of money was not taboo around my house. When I was young, I did chores and earned an allowance. I was taught that if I wanted something I had to work for it and save up. I was educated on the value of a dollar.
As life goes on, these basic tenets have stayed the same and the education continues, although the conversation can become more complex. You need to plan ahead, set goals and work to achieve them.
Earning one dollar doesn’t mean that you can spend two.
Tax planning, risk management, income planning – these are all terms that we use as advisors, but far too often the first time that they come up is in a client’s initial meeting with us. If you keep your adult kids in the loop of the planning work that you are now doing, you are able to again set them up for success in the future and help them avoid the mistakes that you may have made.
Isn’t the goal of most resolutions to start some sort of healthy habit? In my mind, talking to your kids about money definitely fits the bill.