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Setting a good {financial} example

February 25, 2011

By Kirstin Ricketts with Vintage Financial

We all want the best for our kids.  What can we do to make sure that they don’t fall into the trap of the financial stresses that so many face?  From a very young age, your children can feel if you are stressed about your finances, and the way they view money and their finances will stem from the decisions that you are making in front of their very eyes.  When speaking to a middle school class not too long ago, I had a student ask me if their parents were to die, if he would be responsible for their credit card debt.  Yuck!  Kids should not be burdened with this type of pressure!  So what can you do?

One major first step is to get your own finances in order.  Know what you own and what you owe.  Create a net worth statement.  This is as simple as taking a sheet of notebook paper and writing down all of the different accounts that you have.  Don’t leave anything off, bank accounts, retirement plans, credit cards, mortgage…write it all down.  Write down two to five goals that you would like to accomplish financially over the next twelve months.  This may be to start or build your emergency fund, or to start saving for your child’s college, or to increase what you are putting into your  retirement plan at work, or paying off a credit card.  After writing down your goals, identify what action steps you will need to take to insure that at the end of this twelve month period that you will be in a better financial position than you are today.   Put your plan on automatic pilot.  We don’t need to be thinking about our finances everyday.  There isn’t time for it!  We need to be focusing what it truly important.  If you want to pay extra towards your credit card so that you can pay it off, set up a higher automatic payment, if it’s saving for your child’s education, have the money taking automatically out of your account.  Take yourself out of the equation.  Finally, STICK TO IT!  By writing down your goals, identifying what baby steps need to be made so that you can continue to have forward progress, and then putting your plan on automatic pilot you will be well on your way to making sure that twelve months from now, as you reflect back on your progress, that you will not have financially wasted the past year.

Another step that we can all take to set a good financial example for our children is to reflect on how we would want them to live, and then live that way ourselves.  If you want them to learn to be frugal, stop buying everything under the sun.  If you want to encourage them to be good savers, talk with them about how you save each month.  If you want them to tithe to the church, allow them to see you writing your check out each week.  If you want them to set goals, allow them to see you setting and discussing your goals.

Money is often times the elephant in the room that no one wants to discuss.  How can we expect our children to follow our example if we give them no indication of what is going on with our own finances?  Talk about money as a family.  Get your own finances in order so and choose to live in a way that you would  want your children to emulate.

As I meet with my clients when I work with the grandchildren, parents and children, it is common that all three generations will view their money in the same way.  They often times have the same successes and struggles.  Choose to life in a way that will set your children up to find success in the way to they view and handle their own money.

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