Tips for a Financially Fit Fall
Many would agree that a significant amount of what we learn is learned at home. In fact, almost 50 percent of those who closely monitor their finances say that they learned about personal finance from their parents or at home. Yet, only 34 percent of parents have taught their teen how to balance a checkbook, and 93 percent of parents with teenagers report worrying that their children might make financial mistakes, such as overspending or living beyond their means. While awareness of the need for greater financial education has grown in recent years, there is still work to be done.
Here are some tips to share with your family and clients to strengthen their financial understanding.
- Set a good example. The best way to teach good financial habits is to practice responsible financial behaviors in your own life. Sit down with your family and go over the monthly household budget. Take the time to explain the different expenses and where the money comes from to pay for these items.
- Prioritize. One of the most basic financial concepts is prioritization and balancing wants and needs. Have everyone sit down and make a list of what they view as your household's needs; it may end up that a few wants end up on there. Then, go through the list and discuss what makes some more important than others, such as, why it is more important to pay the electricity bill than to have premium cable.
- Promote saving. Explain to your family that when there is something that you really want, needs still come first, which is why it is important to save. Consider giving your children an allowance for completing weekly chores, and help them figure out how long they need to save to reach their goal. 360 Degrees of Financial Literacy has more information on talking to your family about money.
- Stay informed. In order to make informed decisions about your finances, you and your family should stay up-to-date on current events that may influence your finances, such as a shift in interest rates. Make sure that you are aware of any changes to your accounts and other aspects of your finances, such as seasonal heating and cooling bill fluctuations.
Financial understanding is a life-long endeavor, and the earlier children start on the right path, the brighter financial future they can have. How have you helped promote the importance of financial understanding to your family and clients?
Melora C. Heavey, AICPA Staff. Melora manages the CPA profession’s volunteer effort, 360 Degrees of Financial Literacy, and the award-winning public service campaign, Feed the Pig. She serves as the staff liaison to the National CPA Financial Literacy Commission, the leadership body and primary spokespeople for 360 Degrees of Financial Literacy.