on January 22, 2019
It’s never too early to teach your children about money. If they can develop good financial management practices when they’re young, it should be easy for them to carry those lessons into adulthood. Don’t be shy about talking to your children about money—it shouldn’t be one of those forbidden topics that only the adults get to discuss. Be open about the important role money plays and how you rely on it every month to pay bills, buy groceries, purchase clothing, or keep a roof over your heads.
The purpose of discussing money openly isn’t to turn your children into money-worshippers. Rather, it’s to give them a glimpse into how money works in the adult world (it isn’t just for toys!) and to demonstrate how to manage it.
With that in mind, here are five ways to teach your children about financial management:
Be an Example
Recognize that your kids are constantly watching and absorbing what you do, and that includes your financial practices. Commit to making responsibly purchases, not overextending your credit card spending, and paying your bills on time. If you are responsible with money, it will be easier for you to have a conversation with your child about sound financial practices.
Play a Savings Game
You can teach your child a little bit about restraint by giving them money, challenging them to save it, and then rewarding them for saving their money for a certain period of time. You could even create your own tiered savings program, for instance: If your child saves their money for one week, they get a small treat. If they save it for an entire month, they get a toy of their choosing. Have fun with it! Make a chart to track progress and check in with your child from time to time to see how they’re doing with their savings goals.
Have Frank Talks
Even if your child is not terribly interested in your electric bill or credit card statement, make an effort to show him or her these items and explain the basics. Just as you might show your child how to do the dishes or weed a garden, so too can you demonstrate how to pay a bill or write a check. Let your son or daughter know that they are free to ask any money-related questions if they want to learn about something specific. Even if they do not show an immediate interest, you might be surprised by what they retain!
Don’t Just Give an Allowance
Instead of arbitrarily giving your kids money each week, reward them for completing their chores, reading books, performing well in school, practicing their instrument, or anything that applies to your situation. This teaches them a valuable lesson about how the adult world works and incentivizes them to maintain a good work ethic.
Create a Budget
Sit down with your son or daughter and teach them about creating a budget. Make it fun by having categories like “Wish List” (what they’d like to spend their money on), “Giving Back” (causes that they can choose to donate a portion of their money to), and “College Savings.” If they have specific goals for their money, it’s easier to see how it can potentially be divvied up.
You have the power to make a huge difference in your child’s life by teaching them about financial responsibility. By being open about money and intentionally using learning games and tools, you will help your child understand that money isn’t a force to be either feared or frittered away. It is something that they can feel comfortable and confident managing.
If you’re having difficulties initiating money talks with your kids, let me know. I’d be happy to help.