I have a 13 & a 15 year old and I want to make sure that they have a healthy (and realistic) grasp on finances before they're on their own. What's the best way to get them involved with our finances so that they can see how everything works and is connected? The main thing is that I don't want them to end up worrying about our finances, I just want them to understand how everything works. Any suggestions?
I have always been told it that the best way to teach children about money is to have then earn money for the things they want. For instance show them by example how your family operates on a budget and then create a budget for them with their income (allowance/bday money/ job/ etc.) and what their goals are with their money. Essentially you are helping your children create a plan now so they can visualize their long term and short term money wants and put it on paper (put is somewhere where you all can review it weekly/biweekly ie fridge). If you help them put it on paper I think you will see that they will have more purpose behind trying to earn money towards their goals. I hope this helps. I commend you for teaching your children about money as it will be so valuable to them later in life. Best of luck.
Hi Ruth, if they enjoy online games, then here's one for them: http://playspent.org/ It's a bit of a serious theme for teenagers (perhaps), but it may help spark several good discussions between you and them about the value of education, job selection, wants versus needs, etc.
With our own kids (just now out of high school/college), when they were younger we tried to emphasize the idea of delayed gratification, which typically translates nowadays into "save up for your goal rather than borrow to have it now." We also let them experience what it's like to run out of money (allowances) when something "new" came up they wanted to do immediately (like go to a new movie that just came out, but they might have already spent their allowance on a video game or clothes).
The other thing you can do is share with them how you handle your money. Let them know what your income is, how often you get paid, which bills you pay when, what gets withheld on your paycheck, why you're saving for retirement now, etc. This idea will likely make the most sense to them when they are about ready to attend college (as you file the FAFSA).
Hope these ideas help. Mike
Ruth, I think the best thing you can do is begin discussing finances with them. You can also set up a savings account for each and use it as a tool to teach them how to make decisions with their allowance or financial gifts, if appropriate.
You might also check out this online resource which is broken into different age ranges to help children learn about money and finances: http://moneyasyougrow.org/
Good luck with this. I think you're doing a good thing by thinking about and introducing financial responsibility to your kids at a young age.
Ruth - my colleagues have provided very good ideas, none of which I would disagree with. I suggest you also look into MoneyHabitudes which is a card game developed by a therapist and coach. The cards come in an adult version and a teen version. It is a great way to start conversations about money, budgeting, goal setting etc. I use the adult version with my clients and it is always a great experience.