5 Ways To Teach Your Kids About Money
Money, religion, and politics – the main topics that are taboo at dinner parties. Well, as a parent, these three topics might just be at the top of my list of what’s most important to teach my children.
My husband and I had very a different upbringing centered around money and finance. When we began to talk about marriage, it was clear that we needed to be on the same page about spending, saving, investing, debt, etc. This required a lot of research and tough conversations, but it opened our eyes just to how much our parents’ lessons about money formed our finance-related behaviors.
Since having children, we have both made it a point to instill certain lessons and principles around money. Obviously when they become adults they will be in control of their financial decisions, but having education and knowledge behind those decisions is a priority of ours.
#1 Money is earned
My grandmother raised me and my three sisters on her own for the majority of my childhood. In an effort for us to be on our best behavior, she would give us $1 per day if we were well-behaved, by her standard of course. Looking back, I think this move was genius. At one point I saved almost $200 from my ongoing streak of good behavior. Looking back, what a win for both me and my grandmother.
Though I likely won’t implement this exact reward system, I do want to give my kids opportunities to earn money outside of their normal day-to-day responsibilities. For example, it may be your child’s job to do the dishes. But if they go above and beyond and wash dishes, dry them, and put them away, perhaps there is an incentive. Or, if they take out all the dishes, wipe down the shelves and cabinets, and put everything back neatly, that seems worth a monetary reward to me. Going above and beyond should be rewarded, in my book.
#2 Charitable giving
My husband and I give a portion of our income to various charities as it aligns with our values. We will encourage, and likely require, our children to do the same. If they’re given $10, $1 will go to the charity of their choice. It instills the importance of small sacrifices as well as being a good steward of your money.
#3 Loan terms
This one is certainly for kids who might be thinking of loans for college, a car note, etc., but it can also be applied in ways when kids are younger.
For example: if your child wants a more expensive, higher-end toy, they can either save and wait to buy it, or, present the option to buy it for them, but that they will have to pay you every month in installments plus a little more for coming out of pocket for it first (hello, interest). It may sound silly, but it’s a great lesson in delayed gratification, need vs want, and following through on commitments.
#4 Income transparency
This might not be the most popular suggestion, but I believe that being open and transparent about income and its relation to certain job roles and experiences is important. I have no doubt my kids will get to an age sooner than later where they express frustration that their friend has something they don’t, and it’s simply out of our budget. Expressing to our kids about what we earn as a family and where we prioritize our money opens the door for a tough, but honest conversation. Being transparent about how and why decisions are made about money gives your child knowledge that they can then apply to their own financial decisions and even career choices.
#5 Budget
Even as an adult, I don’t always understand where my money goes. I was lucky to have some lessons when I was young about how to use my money wisely, but there was a lot I didn’t know and had to figure out. Teaching our kids about what things cost, prioritizing spending, and knowing what your money goes towards will help them feel more in control of their finances. Start small! This can look like setting an amount for them to spend on their own birthday gift, how to prepare to pay for a car and its expenses, planning a theoretical vacation, etc. Knowing the cost of things brings awareness and value about money to your kids, and knowledge is power.
