India is going through one of the strongest financialisation of savings trends the world has seen, thanks to rising awareness about financial assets beyond the traditional physical assets like real estate and gold and the ubiquity of mobile apps making it easy to transact. Yet, most of us don’t discuss our finances openly, especially with our kids. Here’s Cameron Huddleston arguing why it is a good idea to do so and how it actually helps kids develop their own relationship with money, which otherwise can be complicated. She writes about how the conversations about family finances can differ based on the kids’ age groups.
With elementary age kids:
“…it’s a good idea to give young children insight into why you work and where your money goes. You also can let them start participating in family money decisions once they have basic math skills.
For example, after introducing the idea that you work to earn money, you can help young children understand how you make choices about spending your money by taking them grocery shopping with you. You could create a list of items and a budget, then work with your kids to get everything on the list and compare prices to stick within a budget.”
With pre-teens:
“As your kids become more perceptive about your financial situation and their financial standing compared with peers, they’ll likely start demanding more information.
.. If you’re not prepared to share that level of detail, you should at least be ready to respond to comments from your pre-teens about what their classmates have, followed by questions about whether they, too, can have those things, participate in the same activities or take similar trips.
When asked those sorts of questions, I told my children that there would always be other families that had more money than us and those that had less. I then used the opportunity to discuss why we spent our money on some things and not others. For example, I often told my kids when they were pre-teens that our family enjoyed traveling, so we would rather spend money on trips than buying a lot of things. “
With high-school children:
“So if they hope to attend college, they likely want to know what sort of financial support they can expect from you.
From my experience, it’s important to have this conversation when your kids start high school—not in their senior year. They need to know what you can afford so they can plan accordingly. For example, they might want to get an after-school job and work during summers to start saving, take dual-credit courses to rack up some college credits while in high school, or start positioning themselves to win scholarships.
As your children become young adults, consider sharing details of your retirement planning, estate planning and long-term care planning—especially if you’re counting on them to play any sort of role in your financial life as you age.”
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Note: The above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. The information provided is intended for educational purposes only. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India (SEBI) and is also an FME (Non-Retail) with the International Financial Services Centres Authority (IFSCA) as a provider of Portfolio Management Services. Additionally, Marcellus is also registered with US Securities and Exchange Commission (“US SEC”) as an Investment Advisor.
