Passing along the Planning Ethic
Your kids are going to have the same learning curve to climb as you did when you first tried to get your finances under control. If they are young, present their money education in phases that mesh with lessons they're learning in school. If your kids are older or grown, bring them up to speed by sharing your own financial planning story.
Many money attitudes seem to be hardwired from birth. Your children may be natural savers or natural spenders. If your kids are savers, encourage them by teaching them about investing. If your kids are spenders, help them manage a budget — and resist the urge to bail them out.
Money Education in Stages
Whether you're educating your kids or your grandkids, be sure the lessons you're offering fit with their understanding of planning and delayed gratification. Even if they're older, don't try to pile on too much all at once. Take it one step at a time: Start with the basics of budgeting and money management, managing credit cards and debt, and buying insurance. Next, progress to investing and retirement planning. Try to make conversations about money natural and commonplace.
You can set up a money market account in your child's name and social security number by making the account a Unified Transfer to Minors Act (UTMA) account (also called a Unified Gift to Minors Act (UGMA) account in some states). Alert family members who like to give your children gifts that a deposit to the account would be appreciated.
What Impression Does Your Lifestyle Make?
What message is your lifestyle sending to your children? Remember that appearances can be deceptive. People who appear to have a lot of money may in fact simply have a lot of debt. Make sure your kids understand that. If you're financially comfortable and have many personal assets, be sure they realize that it was good planning — not high credit-card balances — that got you there.
Many people are faced with difficult life changes in their 40s and 50s. If you're dealing with widowhood or divorce, don't be afraid to let the kids know that this has affected your financial situation. Use this difficult situation as an example of how strong financial planning and disciplined habits can help anyone weather even the most difficult storms.