Although 83% of American adults said that parents are most responsible for teaching their children about money31% of American parents never talk to their children about this topic, according to a survey from CNBC and Acorns.
Last week, the topic came up at Northwestern Mutual A better way to money podcast, which featured the social media star and owner of Stur Drinks Kat Stickler and Northwestern Mutual Vice President and Chief Portfolio Officer Matt Stucky.
“I love and respect my parents, but we've never talked about money — I've never seen them talk about money,” Stickler told Stucky during the conversation. “It was taboo. It didn't get up once.”
According to Stuck, parents can root strong money management skill like any other good habit.
“It just takes a lot of repetition – things like saving, investing“I'm not going to teach my 4-year-old to invest, 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 get used to.” immersed in it.”
money It might not have been a regular topic of conversation while Stickler was growing up, but the entrepreneur says her mother showed her the value of a dollar in other ways: repurposing old jeans into shorts or empty bathtubs butter in school lunch containers.
In addition to talking to their children about money, parents can lead by example when it comes to smart financial decisions.
“There are new risks that are now in the parenting equation,” Stucky said. “Things like, What if something happens to me; what if i can't work anymore? How does this affect my child's financial life?“
Navigating these uncertainties means planning for big-ticket items, according to Stucky. Stickler, who has a young daughter, said she has already taken several key steps to secure her future: creating a complete will with a month-by-month timeline and setting up funds for health care and school — even one for clothes and toys.
Related: What your parents never taught you about money
According to Stucky, parents should use today's circumstances for tomorrow's success.
Stucky recommends setting up one 529in which you can contribute education funds and a Roth IRA for your child.
“(With a Roth IRA), you're able to contribute on their behalf up to the amount of the child's earned income or the current contribution limit of $7,000, and the dollars come out tax-free after age 59 ½ or if they have to use that for a qualifying life event,” Stucky explains. “It's a way to set your kids up for it retirementas well as support the wealth of generations.”
Parents may also consider a Uniform Transfer Account for Minors (UTMA), which has no limit on the amount that goes in and allows them to retain control until their children reach ages 18-21, depending on where they live, says Stucky.
Finally, Stucky recommends the “often overlooked option” of permanent life insurance for your child.
“The policy will pay a death benefit one day as long as the required premiums are paid,” he explains. “In addition, policies accumulate cash value, which your child can access during their lifetime.”