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Orange on Green: Family Finances

Orange on Green: Family Finances
Manners, traditions and how to load the dishwasher aren't the only lessons you should teach your kids. Our financial dynamic duo help you break the ice with money matters.


Think of any concept, any topic in which you are competent. How did you first develop that competency level? You learned it. You were taught. You applied your skills and learned through experience. There was a component of trial and error involved in that process.

Yet when it comes to finances, we as a country fall short. Our education system here is flooded with history lessons, mathematics, science projects, reading, writing and a host of other topics. However, do you recall taking a finance class? A class that taught you basic ways to manage your financial world today? Rarely do we find someone who has been exposed to such an offering before or even in college.

 

Look at our families today. We are saving a mere four percent of our household income. Bankruptcies are on the rise. Money and communication issues maintain a high divorce rate. The instant gratification of materialistic things continues with high credit card balances. Frequent fights about money cause stress levels to soar. And all the while, who is watching? Who is learning from this behavior?

 

Our children.

 

We can make things better. What can we do? First, we need to become educated ourselves. As we have said so many times before in our columns, we need to develop our own financial literacy. We teach people everyday about the financial system and how it applies to them specifically. The light bulbs go off. They amend their ways. They become more efficient. Less is going toward the instant gratification, more towards savings. There is more strategic planning and buying, less guilty purchasing. Their objectives are achieved through ‘good old grinding it out’. There is no ‘magic pill.’ Financial literacy is not magic, it is simply doing what you should be doing everyday. It is a philosophy. It is a way of life. Surround yourself with advisors that will educate you, not just sell you products.

 

OK, now you let’s assume you are educated. Second step is sharing your new found knowledge with your children. Get your children involved. Show them how to become financially literate. Suggestions and examples of how to do just that have been shared over the years from members of our community:

 

1. Encourage savings by teaching your children how to allocate a percentage of the money they receive from work, birthdays, gifts, events to their own savings account. This will likely teach them the life lesson of savings.


2. Make sure they have skin in the game. Many of our members have shared it is important for their children to have a share of the cost in things they want, whether that be a material item, a trip or college. (f they know they are responsible for some of the outlay, their appreciation of that item or event will be valued more than if it were simply given to them. This also will help teach them the life lesson of budgeting and a little perspective.


3. Avoid debt through responsible buying decisions. Teach your children about debt and interest associated with debt. Certainly your role in displaying appropriate behavior goes a long way in teaching them this but also shows them how credit cards and debt mechanisms can be a trap. They will be exposed to it right as they enter college if they haven't already experienced it for themselves. That "free T-shirt" is not necessarily free. It may not be a bad thing to be honest and open in sharing the details of your personal debt as an example of how the debt system works. This likely will teach them the life lesson of financial balance and the difference between needs and wants.


4. Maintain an open line of communication. You want them to feel comfortable to ask questions, admit mistakes and inquire for your advice. Stay involved, hold them accountable in a productive way, check in to see how they are progressing from time to time. At some point, your children will be appreciative and thank you for the energy invested in their future.
Tom And Brad Cunningham -

Tom and Brad Cunningham are Cincy Chic's financial columnists, and they are the co-founders of Orangefinancial. If you want to share your comments or inquire for more information, e-mail them at This e-mail address is being protected from spambots. You need JavaScript enabled to view it and This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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