Setting a good example.

As a parent, grandparent, mentor or whatever you are, you have an obligation to teach those around you about managing finances. The school systems do not see this as their obligation. However I applaud those teachers who try to include it within their curriculum restrictions.

So what should our children be taught? And when?

First, they need to understand how much money is needed to live independently. Have you ever sat down and shown anyone how much money is needed to operate your household? Rent, groceries, utilities, vehicle and misc. expenses add up to a tidy sum. Kids are frequently told we don’t have any money. But no one ever explains why or have an open discussion on how expenses can be reduced. Kids help create expenses and they can be productive innovators in cutting expenses if given an opportunity.

Second, they need to understand how much is taken from their wages via deductions. Have you ever shown your children a copy of your pay stub and explained the deductions that are listed. If not, they will consider their gross income will be the amount available to pay expenses listed in the previous paragragh. They will miss their target by as much as 20%.

Third, they need to understand the value of investing for the future. Investments mean less reliance on credit for meeting emergencies. Enough said.

Fourth, they need to know the importance of staying on top of their credit. No one cares about your money as much as you should. There are lots of folks trying to get into your wallet for a variety of reasons. They care about themselves and seldom about you. Can you name anyone who provides advice and counsel with only you in mind. Non-profit agencies such as the CAP Financial Independence Center come to mind immediately.

And lastly, they need to understand the importance of networking and learning throughout their lives. Companies go boom and can go bust as we have seen recently. New job opportunities are most easily found when you are connected to friends and constantly strive to improve your skills.

Now here is the rub. How does someone who does not know how to effectively manage their income and expenses teach their children? It becomes the blind leading the blind if an attempt is made. So the answer is frequently, don’t try teaching anything at all.

But the CAP Financial Independence Center can help here as well as above. They offer classes regarding the basics of financial management. They are commonly free to the community and will help you be better prepared to teach your kids. Contact them at 360-423-3430 x 248.

Regarding the question of when to teach is really very open ended. The kids already learn something’s by simply watching you. You need to include them in some of your decision making and this can start at a very young age. Living independently is best discussed starting in high school, possibly as early as their sophomore year. Understanding the “reality of cost of living” can be an excellent tool to reinforce the need to do well in their studies and help them realistically prepare for “”life”.

The author is a retired financial counselor with 20 years of experience. If you have questions about this article or have ideas for future topics, please contact him @ 575-9395.

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