As a parent, teaching your children about money might feel like a daunting challenge, but it’s actually far easier than you might think. By starting to teach smart money skills and incorporating outside resources at a young age, children will be more likely to retain these financial habits as they grow. Teaching your children about the importance of saving and giving back are also key ways to teach your children about money. By incorporating financial conversations and practices into your daily activities, your children will pick up smart money skills that will last them a lifetime.
DO use outside resources to help teach smart money habits.
Whether it’s reading books or watching videos, you are sure to find outside resources that will help teach your children about smart money habits. Many financial institutions have created resources tailored for children, and you should use these resources as another way for your children to learn more about money. No matter if it’s a video on how money is made or reading a picture book about the value of saving money, there are numerous financial resources for children that you should take advantage of.
DON’T wait until children are older to start talking about money management.
If you wait until your child begins earning a paycheck to start talking about money management, it’s too late. You should integrate discussions about money management into your children’s lives as early as possible. For example, when your young child wants a new toy, you could discuss the importance of saving up money for it or decide if it’s a wise choice on how to spend their money. It’s easier for children to have smart money management skills if they start practicing at a young age versus changing poor habits when they are older.
DO develop a budget specific for each child.
Everyone has a different fitness routine so it only makes sense that everyone should have a different financial budget too. It’s important to help your child develop a budget specific to their lifestyle and interests so it will be attainable to stick to it. For example, one of your children might prefer eating out but not spend much on shopping so you could change those two categories to be different from your child that prefers to eat at home and spend money on video games.
DON’T give your children an allowance without them earning it.
As adults, a paycheck isn’t given unless it’s earned, and your children’s allowance should be the same way. If children don’t perform all of their chores or requirements, they shouldn’t be allowed to receive their allowance. It’s also smart to avoid giving allowance advancements because it’s setting up your children to expect it. Receiving an allowance without doing any chores or having an allowance advancement might not seem like a big deal, but it’s teaching children poor money management skills that will be hard to break when they are older.
DO practice counting money and making change.
As a parent, it’s crucial for your children to practice counting money and making correct change. You can practice with real currency, print out paper currency, or purchase plastic currency to use as resources to practice at home. A great way to practice with money is to give a child a small amount of money and visit a yard sale or resale store where they must handle the financial transaction.
DON’T forget to teach children about the value of saving money.
While children don’t need a rainy day fund to save for car repairs or an unexpected bill, children must grasp the value of saving money. You could have your children automatically save a percentage of each dollar they receive or earn or have them focus on saving up to purchase a specific item or experience. If your children learn smart money habits when they are young, they will be more likely to have smart money habits when they are older.
DO remember to teach children about giving back.
One of the most important things to teach your children about money is how to give back. Giving back could be anything from donating money to your family’s favorite nonprofit, shopping for a family in need around the holidays, or purchasing food to give to a local food bank. Children need to understand that helping those in need is how we support our local community, and when we’ve been given financial opportunities, we need to help others too.
DON’T try to solve all of your children’s money problems.
Not allowing your children to make a few financial mistakes along the way will impact how much they learn about having smart money skills because one of the fastest ways we learn is by learning from our mistakes. If your child wants to use all of their vacation money buying candy at the first store or if your child wants to spend money on an item that you know they will lose interest in within a week, sometimes you have to let them.
If you feel overwhelmed with the idea of teaching children about money, take time to find resources that will help you as a parent find ways to make learning about money fun so your children will be eager to learn and practice their smart habits.
Valerie Cox is a contributing writer for PrepaidBill. In her spare time, she enjoys reading, baking, and volunteering in her local community.
- The Dos and Don’ts of Teaching Your Children about Money - May 27, 2021