How to Teach Your Kids About Finances

How to Teach Your Kids About Finances

We all want our children to have happy and productive lives, so we try to give them the tools they need to navigate life. For the most part, we focus on things like making sure they’re well-educated, polite, and healthy. These are all important, of course, but they’re not all-consuming. If we don’t teach our children about finances from an early age, then we run the risk of them ending up like the majority of other Americans: which is to say, in a poor financial state.  Check out a few ways you can teach your kids about how to handle money the correct way.

Patience and Money Go Hand in Hand

Wouldn’t it be nice to be able to afford whatever you wanted? There’d be no reason to budget, save up, no reason to wait whatsoever. But also you’re one of those rich and famous folks, then this isn’t realistic. We need to be patient, and slowly build up the cash we need to buy stuff. As such, one of the best things you can do for your kids is teaching them the link between being patient and getting what they want. If they need to save their pocket money before they can buy a game, they’ll have learned a valuable life lesson.

Be a Role Model

Our children learn much more from us than we think, and sometimes more than we’d like. They don’t just learn what we teach them vocally – they learn from our actions too. If you practice bad financial habits, then the chances are they will too. So take steps to get your finances in order. You can learn how to get out of debt fast, set a monthly budget, avoid impulse spending, and so on. You’ll be helping your long-term finances, and being a positive role model for your children at the same time. Nice!

Let Them Make Their Own Mistakes

It’s all good and well telling our children not to make financial mistakes, but that’ll only help them to a degree. Experience is the best teacher! As such, one of the best ways to educate your children about money is to let them make their own mistakes. Now, don’t let them sink all of their money into a Ponzi scheme. But if they’re going to buy a toy, and you know that they won’t have any more for another month, then let them buy it. They’ll quickly learn the lesson!

Getting a Job

Parents are mixed when it comes to the issue of getting a job. But really, could it ever be bad? They’ll learn how to manage their money, understand that you don’t get anything for nothing, and build up a work ethic that’ll see them through the good and bad times. It’s a no-brainer.

Saying No

Finally, be prepared to say no to a child’s request! You have to say no to things all the time because of money issues. Say no, and they’ll learn that you can’t always have everything in life.

 

How To Improve Your Child’s Relationship With Money

How to Improve Your Child's Relationship with money

Children and money. Instilling a great work ethic and understanding of money is super important for my husband and I. We want our children to grow up with a positive relationship with money and how it is earned.  As kids, it’s easy to have certain ideas about money:

  • Money grows on trees
  •  Mom and dad are a walking ATM
  •  The tooth fairy is a wonderful provider

These are the concepts that a lot of children grow up believing, at least when they are very young. As they reach their teenage years, they may still think that parents are walking bank machines. They may still believe they should get what they want when they want it. 

No matter how old our children are, we need to negate the myths they believe in and find ways to improve the relationship they have with money.

Be a Positive Role Model

Model positive financial behavior in the way you handle money. This means curbing the temptation to spend what you can’t afford. This means dealing with your debts responsibly and finding ways to restore credit. And this means owning up to the financial mistakes you have made and letting your children benefit from the lessons learned from your experiences.

How Much Do Things Cost?

Explain to your children how much things cost, whether that’s the food you buy from the supermarket or the utility bills you are spending your hard-earned money on each month. When your children know how much things cost, they will realize that such things as food and electricity aren’t free commodities. And who knows? This might stop them pestering you when you’re doing your food shopping. And this will help you when you are teaching them frugal habits around the home.

Teach Children to Save

I remember being young and having money burn a hole in my pocket. I couldn’t wait to spend it on something. Anything. Teach children to save their money rather than spending it on the first thing they see. is a great lesson. And then be disciplined in your response. If they run out of money, tell them they will have to wait until their next allowance if they want anything, rather than being a helicopter parent and bailing them out from within your own finances.

How to Improve Your Child's Relationship with money

Make Learning Fun

Playing money games, and setting them challenges to find the cheapest items in the supermarket. This is better than going for other approaches that are only going to turn your children off from learning about money. I loved playing store as a kid, so you could set up your own store in your house as a learning tool.

Teach Children the Importance of Hard Work

This means telling your children about the job you do, and how the money you earn goes towards paying for household expenses. You should then put your kids to work. Give younger children chores to do around the home, giving them the opportunity to add to their piggy bank. Encourage teenage children to get a job like lifeguarding or at a restaurant. Perhaps they have the entrepreneurial spirit and want to start their own small business. Either way, encouraging them is key.

Children and Money

By improving the relationship between our children and money while they’re young, we are putting them in a better position to manage their finances now and when they reach adulthood. They may still make bad decisions – nobody’s perfect – but at least they will have something to teach their own children.