Congratulations—you are committed to improving your financial health in 2017 and established a doable game plan for becoming financially fit this year. You reviewed last year’s budget, set spending and savings goals, and a timeline for paying off those credit cards. But…you do not live alone you have kids—kids are great consumers. How do you keep everyone following the same playbook?
The key to being financially healthy is a disciplined approach to spending and saving, with a commitment to becoming free of debt. Within the family unit, there can be competing ideas about spending and saving priorities. Nothing can cause more stress within the household than constant arguments about money.
Here are 7 simple strategies that you can easily incorporate into a family game plan and keep everyone committed to the same goal—to be financially healthy.
- Communication. The number one strategy for maintaining a financially healthy and happy household is communication. Make sure everyone is involved in the budget process. When setting your goals for spending and saving, allow all members of the family to express their individual dreams and map out what it will cost to actualize them. Some of the individual categories may be a bit tricky, especially if you have adolescents and teenagers who require a significant clothing budget. They may also be dreaming about vacations and activities with friends. Here is the place to talk about how they can contribute to covering the costs of these items. Honestly discuss income and spending limitations, and build a respect for and interest in saving for the future. Most importantly, communicate clearly, with love and make the entire process fun.
- Modeling. Kids learn more from what their parents do than what their parents say. If you have great family discussions about what it takes to be financially healthy, and everyone agrees on the spending and savings priorities, but then you go out and make a splurge purchase, they will learn that financial goal setting is simply an intellectual exercise. More significantly, you will imbue them with the immediate gratification syndrome which will lead to life-long money management challenges. As long as you maintain your own financial discipline, they will follow along behind you.
- Saving. Take your child to the bank or credit union and open a savings account for them. Encourage your children to invest half of their allowances or earnings in their savings accounts. If possible, introduce them to US Savings Bonds, an excellent and easy vehicle for accumulating savings, and tax-free if used for college.
- Individual spending allowances. Everyone should have an agreed-upon allowance—a certain amount of money that can be spent each month without discussion. As soon as your children are old enough to help out around the house, put them on an allowance. Empower your children to utilize their allowances however they want. This will give them a sense of financial independence and also an opportunity to learn from their mistakes.
- Shopping smarts. Involve everyone in the shopping experience, whether online or at the mall. Teach your children how to comparison shop—to look for the best prices, sales and rewards opportunities, and how to find the best quality product. Before heading out to buy clothing, check the budget, give everyone an allowance accordingly, and let them be responsible for paying for their purchases. Once the money is gone, so is the shopping excursion. Everyone is digital these days, so the entire process can be lots of fun, involving friends when it comes to finding those great deals or getting product reviews.
- The grocery store. Supermarkets are a huge danger zone for the budget-conscious consumer. Everything is designed to attract your eye just as you head to checkout. If you have small children, leave them at home. The goodies along the way are too enticing and it can sometimes be easier to give in rather than deal with the nagging. For your older children, before heading out to the supermarket, do a quick inventory to see what is already in the house, make a menu for the week with a list of what you need, and give each person a part of the list to find in the store. Make the experience fun and focus on keeping to the list, not wasting money or food and staying financially healthy.
- Credit card debt. If you are carrying credit card debt, make elimination a priority in the family budget. Speak to your children about the ramifications of credit card debt, how it impacts the family budget, diminishes the amount of money available for other spending, and hinders the family goal of being financially healthy. Explain how the credit card system works—interest rates, fees, billing cycle, and what happens when the statements are not paid on time. This is also a good time to speak about the impact that credit card debt has on one’s credit rating, something that can take years to repair. Imbue in them as early as possible healthy credit card habits.