I can remember asking my parents just to write a check to pay for something that was ‘too expensive.’ When you’re 6 years old, money is something that just appears in your dad’s wallet and checks are used to buy things that you don’t have money for!
It wasn’t until I started saving my own money that I realized that you couldn’t just write a check or swipe a card to buy everything you wanted.
The scary thing is that a simple concept like this hasn’t caught on for the millions of people in America who carry an average of $15,956 according to a CreditCards.com report.
So how do you even begin to teach your kids about money? The truth is, if you have kids, you’re already teaching them about money whether you know it or not. They’re watching you at the store as you look for deals and while you’re paying at the cash register. Your kids are listening to you and your spouse talk about bills and your monthly budget. Even if you try to keep money issues out of the range of your kiddo’s ears, they’re still absorbing a lot of your habits when it comes to money.
There’s no secret formula for teaching your kids about money, but there are ways to shape their minds when it comes to good financial management. Whether your kids are 5 or 15, it’s never too late to emphasize these money lessons as a parent.
1. Teach Good Stewardship By Your Example
How many times have you encouraged your kids to save a little bit of everything they make? It’s just a good practice to set aside 5-10% for a rainy day, right?
So how’s your rainy day fund coming along?
I know you have bills and credit card debt and medical expenses and car insurance payments, and Christmas presents to buy, and this and that. But if you fail to save, you’re showing your children that it’s OK to spend everything you make. Living paycheck to paycheck isn’t something you want for your kids, so show them that you’re making it a priority to pay yourself first even when the budget is tight.
2. Involve Kids With Money Decisions
Thinking about making a big purchase like a TV, car, or new house? It’s the perfect time to bring the kids into the discussion by asking their opinion. Your kids are smarter than you think when it comes to math – most fourth graders can work long division problems better than adults! Don’t be afraid to give them real numbers to crunch and ask them how they would decide if they were spending their own money.
3. Let Them Manage Their Money
Whether you give your child an allowance or not, it’s likely that they’ll have their own money to manage from time to time. Help them succeed by setting up a bank account for them and by teaching them to keep close records of their spending. If you can’t find a bank with free children savings accounts, use the bank of Mom and Dad for younger kids who need to learn what it’s like to make deposits and withdrawals.
You’re shaping your child’s financial future with every lesson you teach them about money. Learn to talk to your kids about the simple things when they’re younger, and you’ll have the confidence to talk about issues like life insurance and long term care options when they’re older.
In your opinion, at what age is the best time to start talking with your kids about money?