Financial Literacy Month – Talk to your children about Money
November is financial literacy month, and we at Safe Pacific recently attended the Advocis Estate Planning Summit, in combination with these two we felt inspired to inform you to talk with your family, you children, and your parents about money.
Did you know that 70% of wealthy families run out of money by their second generation? And if we go down to the third generation, 90% of families are out of money.
This is called shirt sleeves to shirt sleeves in three generations. A big factor in this is the fact that a lot of parents don’t talk about money with their children. Our upbringing plays a big part in shaping our relationship with money because our kids see and do everything that we do.
How to talk to your kids about money
A lot of parents find it rude to talk about money, they have a very taboo attitude towards it, Financial Planning Canada stated 1 in 4 Canadians don’t feel comfortable talking about money, but they say the best way to lessen that feeling is to talk about it more and more often.
Start slowly, ease your kids into this conversation, no big lectures. As a parent with young children, experts say sharing positive money stories is an easy, casual way to help your family normalize thinking about and discussing financial planning.
Talk to them about saving money, say they got $50 from grandma, tell them they can buy a toy with half and save the other half to add to their allowance for something bigger and better down the road. Be as honest as possible about your own struggles with money with older children.
Tell them if you regret running up your credit card bills when you were in your 20s; that will teach them valuable lessons about managing debt and the perils of overspending. Remind them that ATMs are not free money machines, and don’t hide new money failures; use them as teachable moments.
Another good thing to teach them is budgeting, maybe with a piggy bank as they are younger to save their money but once they are older, introduce an app to help them keep track, they’re probably going to find that easier as they grow up with so much more technology.
Include your children in the family discussions about where your money is going. Obviously, remind them that you’re the adult and you make the final decision but it’s important to feel involved, because maybe you all would love to buy a hot tub this year, but you really need a roof repair, the roof repair should come first.
That post-pandemic vacation may have to wait as you need a new car first. That’s a great way to talk about money with your children and grow that literacy.
How to talk to your parents about money
And if you’re an adult child and you have no idea about your parents’ finances or what their plan is for when they pass.
You should be able to ask them about it, it does affect you.
Not a fun conversation but an important one is to know who the executor of their estate will be when they pass but you don’t necessarily need to know but they should know, and if they don’t then they should start speaking to a financial planner and a lawyer.
If you’re an older parent with adult children, it’s important to set up a will, choose an executor, choose a direct beneficiary, which could be your child or your partner if they are alive as well.
This is all tough to talk about but being prepared for the worst allows you to enjoy the best.
We always want to know what our client’s attitude towards money is, and that is informed so much by their parents and how they were raised.
And we recently attended the Advocis Estate Planning Summit, so we can’t set up a will or estate plan, but we have a broad network of individuals we can point you toward.
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