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Teaching kids about money can be nerve-wracking. Especially when you’re an adult and you aren’t quite sure you’re doing this whole “money thing” right in the first place. I’m going to be honest here…I’m a mom and I know fully well that I’m going to screw my kids up in some way. Yes, I’m owning my imperfections. I raise my voice more than I care to admit and don’t even get me started on parenting in this social media world! But I promise you that I’ll teach them how to handle money well.
Your child’s foundation with money must come from home. It’s up to you to ensure that you teach your kids how to handle money responsibly! And maybe, JUST MAYBE you’ll be able to send them into the world as an adult that won’t acquire debt and live irresponsibly. To help make that happen, I’ve listed out 6 ways on how to teach kids about money.
1. Start them at a young age.
It’s never too early to start teaching your children about money and finances! Think about it this way: the earlier you start, the more exposure they have! And the more exposure your child has about money, the more prepared they will be to grow up and handle money as young adults. Start giving them an allowance for helping out around the house at 3 years old. Then, give them three quarters for their work. You can easily separate the money into three categories: save, give and spend.
2. Teach them to save money.
Kids need to learn that saving money is the KEY to financial success. And sometimes that means you force them to save some of the money they earn. Just like you make your children brush their teeth to develop healthy habits, you should teach them to save part of their money. So whether your child is a teenager and working a part-time job or a 4-year old that is earning quarters for picking up their toys, make them save some of their money!
Anytime our children earn money, they are required to put some of their money in their “save” jar. When that jar fills up, we take it to the bank and put it in their savings account. We currently make them save about a third of what they make, but you and your child can choose the right amount of money to save. I recommend saving at least 20% of their allowance or income!
I 100% believe that people are wired to be spenders or savers. And I’m definitely a spender! Back when I first started teaching, I’d walk into Ulta for one thing and walk out with $200 worth of products. I got a thrill from spending money. I never thought I would get that same thrill from saving money. However, I learned how to go from being a spender to a saver. I learned the importance of saving money even though every part of me wanted to spend! Imagine if I had learned this important lesson earlier in life. It’s never too early to teach your child the importance of saving money!
3. Teach them to give.
A few weeks ago, I picked up Starbucks gift cards for my kids’ teachers as a Valentine’s Day gift. We taped them into a simple card and I had my 6-year old son write a short message inside each card. On Valentine’s Day, we delivered the card to one of his teachers. She opened the card, thanked him, and gave him a huge hug. As we were walking away, my son had the biggest smile on his face. I asked him why he was smiling and he told me that it made him happy to give a gift to Mrs. Brown. The act of giving brought him joy. It filled his heart with happiness to the point that he couldn’t help but smile. This is what giving does to people! I am so thankful that my little boy was able to experience that feeling. He is learning that giving is good.
Children need to be taught to give of their time, money, and heart. The best way to teach them to give is by allowing them to see their parents give and to have an opportunity to give themselves. Giving your time and resources not only helps others, but it brings people joy. Have your children set aside a portion of their income or allowance (10% is the perfect amount!) to give to someone in need, a church, or a charity. Not only will the person receiving be thankful, but you’ll be giving your child the gift of joy. Be sure to take in their smile when they offer over their giving!
4. Teach them to spend wisely.
Even as a child, I was a spender at heart. I remember being home on the weekends and busting into my piggy bank any time I heard the ice cream man coming down our street. I’d spend money left and right! I’d sift through the sale ads on Sunday morning and gaze longingly at what I wanted to buy. And all that time, I never spent my money wisely. I’d spend at the drop of the hat. To say I was an impulsive spender would be an understatement!
It’s important to teach children how to spend wisely. Teach them to put thought into what they want to buy. It means that they think about it for more than 5 minutes before they make the purchase. Teach your children to be patient in their spending, do their research, and decide if the purchase is one that they really want. And if they don’t have the money for it just yet, teach them to save for it!
5. Teach them about credit cards for goodness sake!
I’ll never forget the wise words my mom gave me before I left for college. “Don’t sign up for a credit card, Allison. Just don’t do it!” Those words stuck with me and I’m glad they did! Credit card companies target young adults. They camp out on college campuses, promote in stores, and even restaurants!
I remember being 18 years old and walking into a Chipotle with friends. There was a table near the door where you could sign up for a credit card with Chase. If you signed up, you got a free meal! Do you know what college kids love? FREE FOOD! My friends quickly signed up for a credit card in exchange for a Chipotle burrito. They couldn’t pass up the “great deal.” However, at that moment I remembered my mom’s words of wisdom. I paid for my burrito and didn’t end up overspending on a credit card during my college years.
6. Talk about your budget in front of them.
A lot of people as me how my husband and I have time to talk about money and the budget since it seems like the kids are always around. My answer is always the same: we talk about it in front of them! Now you have to understand that we don’t have money fights. We communicate well about money and have lived on a budget for almost our entire marriage. It’s not uncommon for us to sit at the dinner table and talk about our finances. We’ve also been known to create a mini-budget in front of the kids when we have had trouble sticking to our budget. (By the way, if you aren’t writing mini-budgets, you need to start. They are a GAME CHANGER when it comes to sticking to your budget!) I believe that it’s important for children to hear their parents talk about money and finances from a young age. The more they hear about it at home, the more they will be able to apply it to their lives when they are adults.
Think about it this way: would you rather send your son or daughter off into the real world with a strong foundation of how finances work, or would you rather let them figure it out on their own? I know what I want for my kids! And that foundation starts at home. And one of the best ways to give your children that foundation is to let them see budgeting in action. Let them see what it looks like to pay a bill. Let them see you track your spending whether you write it all out on paper or use an app. You are their teacher!
Need help with budgeting?
I know that budgeting can be tough. Especially when you didn’t grow up learning about how to handle money responsibly! Thankfully, I’m here to help you get started with budgeting! Sign up for my FREE Budgeting Basics Email Course where I’ll teach you step-by-step on how to write a budget that will fit your needs. Plus, I’ll send you free printables along the way to keep you organized!