Insurance News Net | You Helped Your Clients Build A Budget—But What About Their Kids?
Mar 25, 2022
Part of our job as advisors is educating clients on good financial strategies, including helping them determine and maintain a budget. But who’s educating their kids?
Just as sure as budgeting is a key to financial success, it’s a topic that’s often avoided, even at the adult level. If you can find a way to help your clients sew the concept of budgeting into their kids’ brains, their children will grow up with a healthy attitude on the subject and will have a much better chance at achieving a secure financial future. Plus, by empowering your clients who are parents to have this beneficial conversation with their children, you’ll cultivate greater client trust, securing longer-term clients.
Beginning The Conversation
Tweens (ages 8-12) are at the age where the concept of budgeting starts to make sense. Introducing them to your actual household budget is a crucial first step in helping them understand what money is and what money does. It’s a natural next step to then move to establishing their own micro budgets.
Before introducing the budget conversations, your client will want to first explain the differences between income and expenses. In a child’s world, income can be described as any form of inflow from allowance or part-time jobs such as caddying, mowing the lawn or babysitting. On the other hand, expenses are outflows for goods and services such as toys, books, clothes and food.
With that foundation, your client is now ready to define budgeting and why it’s important. Parents can start with the simple explanation of: “Budgeting is the way our family decides what our financial priorities are, and it helps us spend in order of greatest importance based on our financial situation. Done right, this allocation of money gives us the ability to spend without guilt, assuming we’ve included adequate saving as part of our plan.”
From there, they’ll be able to break down how budgeting helps their family determine financial priorities (such as food or school tuition) while still allowing them to spend money on nonnecessities (such as toys or a family vacation). Sharing which items are financial priorities — such as food, clothes and shelter — compared with nonnecessities is helpful too.
