No one is born knowing how to manage money.
Our children need a slow and steady introduction to the topic of how to make smart money decisions, just like the process of learning to read. (No one starts out reading War and Peace.) Then, they need practice and increased responsibility–bit by bit, year by year, until they can successfully fly solo.
Don’t worry if your current financial situation isn’t perfect–no one’s is. By involving your children in conversations about money you’ll be able to learn together, impart wisdom, teach them from your mistakes, and ensure that they have the tools to make smart money decisions on their own someday.
Here are 5 ways my husband and I have started teaching money smarts to our children:
1) Review the Family Budget Together
Our kids know that mom and dad work to earn money. They also know that our income goes to pay for things like groceries, clothes, and toys. Recently, we’ve introduced some of the more unseen budget categories like utilities, retirement, car repairs, and Christmas savings.
Seeing what a budget is and how it works gives our kids ownership of the process and an understanding of why we do what we do each month. When we say, “There isn’t any more eating-out money left,” they understand why. When we talk about prioritizing expenses they grasp why we pay for our lights to stay on before we shop for toys.
2) Let Kids Handle Money
There is no better way to learn about money than to actually be responsible for it. Our kids earn a commission on specific chores that are above and beyond the basic requirements of helping our family function. For example, without payment everyone is required to put away their own clothes when the laundry is done. We also all clear our dishes from the table after dinner. These two chores are about being responsible for things we own and cleaning up the messes we make. Chores that earn payment are things that are extra helpful, like organizing projects, emptying the dishwasher, and folding towels.
With the commission they make for extra work, they practice counting, giving, saving, and, of course, spending!
3) Embrace the Fun of Window Shopping
Whenever we go to Target, I let my kids hold my phone and take pictures of things they like. This has eliminated the “I want this!” and “Can we buy this?” talk and has given them a fun focus while I shop for what we actually need. It’s like window shopping 21st century style!
My kids have learned that as fun as it is to buy toys, it’s often just as fun to look at them. It also gives them a starting point when referencing what they would like to save for. Impulse purchases plague our country (hello, credit card debt!) so teaching my kids to walk slowly, make a long list of what they would like, and then practice narrowing it down and saving teaches them skills that will hopefully minimize impulsive decisions now and in the future.
4) Practice Delayed Gratification
My husband and I practice delayed gratification often and talk through our plans with the kids so they see that as a family we are saving rather than borrowing for immediate gratification. Right now they know that Daddy is saving for a new-to-him truck and together we are all working a little extra to fund a trip to Disneyland.
No one likes to wait. That’s just not human nature! But, delaying gratification is a valuable skill that our children can learn. It helps them discover many things are worth the wait.
5) Choose Wise Words When Discussing Money around Your Kids
We must be careful with the words we use when describing money. We don’t want to instill a mentality of scarcity in our kids or turn them into tightfisted little misers.
Talk about money as a tool – it works for us and does exactly what we tell it to. We own it, it doesn’t own us. Make sure they know that money is something we can give to those in need and trustworthy organizations. In our family, we use the “Open hands”approach, meaning that money comes in and money goes out. And that’s just the way it is supposed to be. And, just like a well-tended garden, money is something that can grow. Just getting by month to month isn’t the goal. We want to practice and teaching our children about wise investments. Money is important, obviously, or we wouldn’t be discussing it, but it should never be the focus.
How are you teaching your kids to make smart money decisions?
