TEMPE, AZ — No parent wants to see their children struggle financially. Experts say that giving them too much could make them unprepared for the future.
In this Smart Shopper report, the experts weigh in on what financial advice parents should start teaching their children today.
One of the biggest takeaways was to start having financial talks with kids at a young age that are appropriate and change as they get older.
ASU Professor Debra Radway gives lectures on finance at the W.P. Carey School of Business. She sees a disconnect with her students and real-world money tips.
“Some parents just want to provide so much for their children, that in some ways, they do a disservice because they don't teach the children to make financial decisions at a young age,” she commented.
Her top tip for helping kids with money is to start with an allowance and teach them: once it’s gone, it’s gone.
“Maybe you have a budget of $50 a month for your kids' clothing and spending money — give them the $50 and have them figure out how to spend it. And if they run out of the $50, then they have to wait till the next week," Radway suggested.
Student Stephanie Martinez’s mom always taught her to live within her means.
“My mom, she was always like, very keen on budgeting, and...savings and everything,” Martinez recalled. But still, some lessons came as a shock — like the price of groceries, even for just one person.
Another tip Radway suggests is getting familiar with credit cards. It's more about knowing how to use them rather than banning them.
“There's ways that you can actually add a child to your credit card, let them use it maybe for one item. And that allows them to build credit in their name if you have good credit yourself," Radway said.
Radway says you can also talk to high schoolers about retirement plans. It may seem early but she says people have a much higher retirement success rate starting in their 20s than starting in their 30s.
The bottom line is to start talking about finances when kids are young and they'll likely be more successful in the future.