While 83% of American adults say parents are most responsible for teaching their children about money, 31% of American parents never talk to their children about this topic, according to a survey from CNBC and Acorns.
Last week, this article came out of Northwestern Mutual’s A Better Way of Money The podcast, which featured social media star and Stur Drinks owner Kat Stickler and Northwestern Mutual vice president and senior portfolio manager Matt Stucky.
“I love them and I respect my parents, but we never talked about money – I never saw them talk about money,” Stickler told Stucky during the interview. “It was unacceptable. It was never brought up.”
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In accordance with Fortunately, parents can instill strong money management skills just like any other good habit.
“It just takes a lot of repetition — things like saving, investing,” Stucky said. “I’m not going to teach my 4-year-old about investing, but just the idea that if I save a dollar, that means I can spend it down the road on something I really want. That takes a while to sink in.”
Money may not have been a common topic of conversation when Stickler was growing up, but the entrepreneur says her mother showed her the value of a dollar in other ways: turning old jeans into shorts or empty tubs of butter in school lunch containers.
In addition to talking to their children about money, parents can lead by example when it comes to making smart financial decisions.
“There are new risks in the parenting equation,” said Stucky. “Things like, What if something happens to me; What if I can’t work anymore? How does that affect my child’s financial health?“
Navigating that uncertainty means planning for big-ticket items, according to Stucky. Stickler, who has a young daughter, said she has taken important steps to secure her future: setting up a will with a month-to-month timeline and establishing funds for health care and school — and even one for clothes and toys.
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According to Stucky, parents should use today’s circumstances to succeed tomorrow.
Stucky recommends setting up a 529, which you can contribute to education funds, and a Roth IRA for your child.
“[With a Roth IRA]you can contribute on their behalf up to the amount of the child’s earnings or the current contribution limits of $7,000, and the dollars come out tax-free after age 59 ½ or if they need to use it for a qualifying life event,” Stucky explains “It’s a way to prepare your children for retirement, and supporting productive wealth.”
Parents may also consider the Uniform Transfer to Minors Account (UTMA), which has no limit on the amount that goes in and allows them to control until their children reach 18-21, depending on where they live, Stucky said.
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Finally, Stucky recommends the “often overlooked option” of permanent life insurance for your child.
“The policy will pay the death benefit one day as long as the required premiums are paid,” he explained. “In addition, the policies accumulate an amount of money, which your child cannot access during his lifetime.”
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