Healthy Kids - Spring 2021

Money Matters Get your kids on the path to financial literacy DOLLARS & SENSE

“Sometimes the child might make a selection the parent knows they’re not going to actually like, but that’s an important lesson for the child to learn,” says Dr. Maxwell. “Making those mistakes as a 7-year-old is much, much better than making them when you’re 27.” Parents can also discuss with their child in an age-appropriate way how a savings account works and how interest is accrued, and how to set a budget. As kids get older, the discussion can move to early-adult decisions like buying a car, setting up a retirement account and how to responsibly use credit. For teens, parents can put ideas into action with a low-limit credit card that they supervise and monitor. “A lot of times, people in their early twenties get in trouble with credit card debt because they didn’t know how to manage it; no one ever talked about it,” Dr. Maxwell says. “Making sure that conversation happens before your child leaves home is really important.” A professional financial advisor or reputable online resources can also be of help with topics outside the parents’ wheelhouse. “A lot of adults in our country don’t have a great financial literacy,” Dr. Maxwell adds. “So part of the money management education of a child is doing a self-assessment of yourself as a parent.”

INSTILLING A FINANCIAL EDUCATION goes far beyond doling out a weekly allowance. Though a basic understanding of money management sets kids up for financial success in the future, a survey by small business financier Guidant Financial found that one in four parents never or very rarely discussed household finances with their kids. “We encourage parents to raise their children to be successful independent adults,” says Ben Maxwell, MD, interim director of Child and Adolescent Psychiatry at Rady Children’s . “So starting those sorts of lessons early on is critical.” The grocery store can be a great place for younger kids to start making decisions on how to spend money. Let them choose between two similar items, for instance cheddar or mozzarella cheese or chocolate or strawberry ice cream. They’ll learn about trade-offs and that with each decision, you might have to sacrifice one thing or another. As the child gets older, they become capable of making more complex decisions. An opportunity to earn money, say by doing chores around the house, will give them freedom to spend money how they’d like and build on that experience with purchase selection. And though it may be hard, it’s important for parents to not intervene and to allow children to make questionable decisions, in hopes that they’ll learn from their mistakes.


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