July 07, 2016
Sitting down with your children once a month and having them help you pay the family bills is an incredibly valuable life-lesson opportunity that sadly few families use.
I don't just think it is “nice” to give a tween or teenager a window into the basics of household cash management. It is vital. If you are serious about giving your child the best possible chance at being a successful adult, teaching them how to handle basic household finances is a very important skill. I have worked with far too many young adults who tell me they had no clue what they were doing, and spent the first few years of their adult life digging out of big financial holes they dug for themselves.
Here’s how to teach your kids the important basics of household finances:
Make it an Allowance Task: You know I believe that no child should be given an allowance simply for showing up. It should be tied to completing a task that helps the family. That can be anything from folding the laundry to mowing the lawn. Or, perhaps, helping you stay on top of the basic household bills: utilities, mortgage/rent, credit cards etc.
Use Online Bill Pay. If you don’t already, this is a perfect opportunity to set up online bill pay through your checking account. Your mortgage should be an automatic payment—you never want to trip up on that. But for all your other bills, consider going manual. For purposes of teaching your kids it is important to receive the bill (e-bills are fine) and then have to go through the process of scheduling an online bill payment. You can fully automate after six months or a year, once your kid has learned all about household cash flow.
Schedule a Monthly Sit-Down. You are to arrange a specific date/time when you and your child will sit down together to go through the monthly bills. This is an important side lesson: that bill payment should be part of a routine.
Compare Monthly Spending. Many of your bills have stories to tell. Does your utility bill spike in especially hot/cold months? What did the credit card bill look like after the family vacation? Understanding the variability of some bills is important learning for a child. It is also a great conversation starter on how the family might be able to work to reduce bills. Until you lay it out, a teenager isn’t going to naturally understand that a shorter shower, turning off lights and unplugging all their electronics when not in use, helps save money.
Hand Over the Mouse. I think most of us learn best by actually doing something, not just observing. Once you’ve logged onto your account, give the mouse to your child and have them input the payment info. And be sure to discuss the importance of scheduling a payment at least three business days before a bill is due. Just to make sure you are never susceptible to a late-payment charge.