Do you ever wish someone had sat you down and really taught you about money? That you could have understood from an early age the difference between credit and debit or how much you should be putting into retirement? You’re blessed if you had adults in your life teaching you about such things. But for most of us, we’re either too busy or we don’t understand personal finance well enough on our own to begin laying those foundations for our kids. I think we often underestimate how much kids can truly understand or appreciate when it comes to money. There are plenty of age appropriate ways to communicate with your children about money and teach them lifelong lessons sure to bless their financial future.
1) Make Them A Part of Your Financial Journey. If you’re currently digging out from a mound of debt, the worse thing you can do is to talk to your spouse in hushed tones or with passive aggressive words in front of your children. Kids are so smart. They’ll know that something is up and sense your tension. One of the best things you can do is to explain to them where you’re at financial (again with words they can understand) and your plan to get out of debt. If you don’t the tension grows into the “Monster Under the Bed” Syndrome where your children will assume the worst about your financial situation. You don’t have to go into graphic detail about arms on your mortgage or interest rates. Keep it basic and straightforward but honest.
2) Help Them Manage Their Money. Whether it’s for good grades or a gift from Grandma, it’s important to begin to teach your children the lessons of giving, saving, and spending. We use a very basic strategy of 10% to Give, 10% to Save, and 80% to spend. There are FREE Kids Printable Budgeting Envelopes here on my site. We talk about short term and long term spending goals. And we offer matching programs for really worthwhile spending goals like computers or even cars. Our 11 year old daughter recently drew up a contract and made us ink it, promising to match her savings up to a certain dollar number for her first car.
3) Avoid Allowance. In the Queendom, we don’t do allowance. There are certain household tasks you attend to in order to eat and sleep in our home. You do these without being paid and preferably without being asked. However, there are a few tasks above and beyond the call of duty that you can gain wages for doing. We don’t necessarily pay for such jobs on a weekly or even monthly basis; however, the opportunity to earn is always there. We provide both the basics and even some blessings but if there’s something that’s out of our price range or purveyance then there are always opportunities to earn.
4) Talk About How Much Things Cost. When I speak to school groups, I do a game show that I like to call “How Much Does it Cost?” You’d be surprised that even most upper elementary kids don’t know that a house is more expensive than a car or how much a pair of jeans cost. When you’re budgeting to purchase a new vehicle, discuss how much you’re planning on spending and what the range of prices are. When there’s a “must have” item of the season, talk about trade off cost – what else could we do with that money as a family? This is an extremely valuable exercise for families to undertake.
5) Help Them Think Through Ways to Save. Is your child getting ready to make a purchase? Help them look for the best deal, compare stores, and if at all possible find coupons to maximize their dollars. Think about generics or knock off brands and most of all, even if it’s EXTREMELY hard, do NOT give them extra money to cover the cost if they come up short of what they need. Teach a valuable lesson that we spend what we have and nothing more. Living on less than you make is a life long virtue and if we want to instill that notion in our children, it begins when they’re toddlers, not when their teens or even adults.
What a high calling, to help kids learn about how to best earn and manage their resources! It can be a tough job but it is so worthwhile. Be the person you wish would have taught you about money so many years ago.
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