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I’ll never forget my nephew once asking my sister, “Why don’t you just go get a gift card to buy [whatever the item was] so you don’t need any money.”
Aha! As if you can just pull a gift card off the shelf and use it with no questions asked. The ignorance is adorable 🙂
Now, just to be clear, this is not a knock against my sister in any way to imply she should have taught him better! Of course not! It’s just a cute little story to introduce kids and money.
If you found yourself clicking on this post then you probably agree that teaching kids how to handle their finances is important.
In my humble opinion, it’s one of the most important things you can teach your kids!
Our society is overflowing with adults that were never taught how to properly manage their finances. Because of that, people are drowning in debt and will not have a solid cash flow when they retire.
And they’re not entirely to blame! They should have been taught financial literacy in school. But it seems that many people leave high school without having even basic financial skills.
That is why it is important to make teaching your kids about money a priority.
Although I only have a 9 month old right now, I am a trained elementary teacher and worked at bank. So I have some wisdom I can pass along!
Also, these tips assume that you are following them as well! If you are not, there’s no time like the present to get on track 🙂
As with many things, an early start is a great way to make something a habit for life.
Have you tried to learn anything as an adult? I tried to learn both Spanish and German and failed miserably! And many adults do. But it’s amazing how well children can learn more than one language fluently!
Kids catch on to things pretty easily and learning good financial habits early will only help them become expert money managers when they are adults. Plus, being only children, they will have lots of practice to make mistakes without it ruining their financial life.
So how early should you start?
You can begin helping your children learn the value of saving money by opening up a savings account when they are born. That way when they are old enough to start learning more about money, they will actually have some to use. And then you can gradually introduce other financial skills when age-appropriate.
As of today I only have a 9 month old, but I pray that I will be the kind of parent that teaches my children how to behave by showing them and not just telling them.
In the same way I can’t get mad at my kids for not making their beds when I don’t make my own bed, I can’t expect my kids to manage their money responsibly if I don’t do it myself.
Show your kids how you create a budget. Explain to them why there is only so much money to spend on groceries that month or on eating out. And let them watch you work on your budget every so often.
Show them how you track your spending using a checkbook register or another tool, and how you know whether or not you are staying within your budget.
Show them how you pay bills. Teach them your method for being sure bills get paid on time and how you keep track.
Talk to them about your work (or your spouse’s). Explain that you earn a wage for working and that is how you buy things.
And show them how you save money when you want to make a large purchase instead of using credit.
If you begin showing your kids these habits early and review them occasionally, they won’t be able to help but have them stick in their minds!
I am looking forward to having these conversations with my son and any future children we may have.
Give them an allowance for doing work
Kids need to learn that money comes from hard work and there’s no reason they shouldn’t be able to start learning that at a very early age.
Consider sitting down with your spouse and kids to come up with a list of chores they can do (remember to keep the chores age-appropriate).
Then determine the “wage” that can be earned when the chore is completed (and how often).
Be careful when the kids are very young that you focus more on completion, rather than quality of the work. When they are a little older you can start putting quality into play.
We did similar systems in the classroom where students would earn “money” by their behavior. They could then turn in that money to purchase a prize. Granted, it’s not entirely the same since they earned wages for behavior and not work, but the idea is the same. Of course with your children they will earn real money!
Have them budget their allowance and gifts
Teach your kids how to take their earned wages and any gifts they receive to create a budget. Obviously this budget won’t be as elaborate as an adult budget. The categories can be as simple as “Savings” and “Fun Money.”
Show them how to allocate so much to each category and how to adjust their budget if necessary. This is an opportunity to teach them how important it is to save money. If there’s anything they are wanting, such as a new video game, teach them how to save for it.
Teach them how to honor God with their finances
Another category you might want to consider putting into their budget is “tithing.” If you are a tither, explain to your kids what it means and why you do it. Then show them how they can take 10% of anything they earn to also tithe.
Also explain to them how staying out of debt is important. Proverbs 22:7 says:
The rich rule over the poor, and the borrower is slave to the lender.
Tell them your story. Are you currently struggling with debt? How are you working on getting out of it? Be vulnerable and real with them so they can learn from your example.
Show them how to use a checkbook register
As I mentioned earlier, you should model for your children how you track every one of your transactions. Anytime you buy something, show them how you record the transaction in a checkbook register (or wherever else you record transactions).
When your kids are old enough to have a debit card, be sure to go over with them how they should keep track of what they spend. Even if they don’t have many purchases, hold them accountable to doing this! It is such an important skill.
Too often, when I would open first-time checking accounts for teens, I would proudly hand them their first checkbook register only to have their parent whisper to them that they don’t really need that because they can just look online at their account.
Please don’t believe that lie. Yes, obviously they can just look online. But keeping track of their own finances is so important to avoid getting into financial trouble.
I believe that kids should learn at an early age good financial habits. When they do, they are on much better track to not get into financial trouble later in life. As parents, we have a responsibility to help our kids with this. If you’re thinking it’s too late for your kids, you’re wrong! It’s never too late to begin teaching them good habits. Sure, they might not stick as well had they been smaller, but it will make a difference!
5 Tips to Help You Stick to Your Budget
Life Stages to Talk to a Personal Banker
What I Learned About Money From Working At a Bank
How Poor Money Management Increases Stress and What to Do About It