It’s never too early to help your kids learn how to be responsible with money. If you help your children follow these nine tips, you’ll lay the groundwork for a life of financial success.
1. Ditch the piggy bank and use a clear jar
Using a piggy bank is one of the oldest tricks in the book when it comes to teaching kids how to save money. However, it’s hard to see inside of a traditional piggy bank, which defeats the purpose of watching bills and coins gradually accumulate. While financial responsibility and kids don’t traditionally go well together, making it easy for your kids to see the progress of their savings gives you a leg up.
2. Directly demonstrate the value of money
One of the easiest ways to teach kids about money is to show them how much the things they want cost. It isn’t enough to simply point out the price of a toy or snack that your kid wants; you’ll also need to help your son or daughter gather his or her money, go to the store, pick out the item, and give money to the cashier. The more times you repeat this process, the easier it will be to bring together the seemingly antithetical subjects of financial responsibility and kids.
3. Demonstrate the consequences of purchasing decisions
Teaching kids how to save money isn’t enough; you’ll also need to show your children the consequences of choosing one purchase over another. When your child makes a choice regarding how to use money, point out that he or she will now be unable to use this money in another context. It’s important to demonstrate the limits of money and how you can’t always have your cake and eat it too.
4. Decide between allowances and commissions
There’s no clear winner in the eternal debate between giving kids money for breathing and paying them to do chores. One side of the argument maintains that since money isn’t free, it’s important to demonstrate to kids that the only way to get paid is to work. On the other hand, some parenting experts contend that only giving your kids money for chores disincentivizes them to help around the house when they aren’t getting paid, and this approach may also make your kids feel more like laborers than family members. One way or another, it’s important to get money in your kid’s hands to make sure that he or she knows how to spend it.
5. Teach the dangers of impulse buys
It’s impossible to teach kids about money without emphasizing the danger of impulse buying. Instead of caving whenever your child sees something that he or she likes in a store, point out that the item will probably still be there tomorrow. Show by example that waiting a little while helps you determine whether or not you really want something; if your kid forgets about the item by the next day, provide contrast by gently bringing up how much he or she wanted it before.
6. Encourage charitable giving
Making and hoarding money isn’t enough; we find happiness through giving to others in need, so it’s important to introduce your child to the idea of charitable giving earlier. Giving isn’t just about handing out cash to anyone who asks. Demonstrate the importance of using discernment when being charitable.
7. Give your teenager a bank account
Once your child has entered his or her teen years, it will be time to take things to the next level. A piggy bank won’t be able to hold all of your kid’s money once he or she starts working, and it’s always better to learn about how banks work earlier than later. If you need a loan, take your kid with you to learn more about the lending process.
8. Start budgeting early
Having a budget is the key to staying out of debt and avoiding financial destitution. Even if your teen doesn’t have any significant savings or income, you can start early by demonstrating the importance of putting money away for college, vocational school, or rent.
9. Demonstrate the value of contentment
While learning about how to make and spend money is an important aspect of your child’s financial education, it’s also important to teach your kid about the things that money can’t buy. Stress the importance of being content with what you have.