When it comes to kids and money, if you don’t teach your kids how to take care of money, they will learn it from somebody else. Is that something you are willing to risk?
Teaching children money principles is going to take time and effort from you. Along with most other parenting challenges, you must be intentional because it’s not always going to be easy. But if you want your children to know how to successfully manage their money when they get older, take the time to teach them when they are young.
Financial guru Dave Ramsey has tons of tools and great ideas about the specifics of teaching kids to handle money, so I’m going to leave that to him. So let’s start simple. Here are three very important things your kids need to learn about money to set them up for success later in life.
How to Save.
However you choose to give your child money, whether it’s an allowance or for doing specific chores, help them learn to save, 10% according to Ramsey.
There are many ways to do this:
- start with a piggy bank
- open up a saving account for them
- help them set a goal of something to save for
Talk to them about the importance of and the benefits of saving. Start this as soon as you start giving them the allowance or earned money and encourage them to do it until they automatically do it on their own. Repeat the message that every time you get paid, you should save some of your income to help prepare for the future.
The best way to teach your child to save is to set the example. Have your own jar of money that you put funds in regularly. When you’re shopping, show your children how to be discerning in what they buy, comparing prices.
How to Say No.
My dad was infamous for asking us this question when we were struggling with whether to buy something or when we came to him to ask for money for something… “Is it a need or a greed?”
I hated that question, because unless it’s food or medicine or a roof over our heads–those things that were obvious needs–how could I justify it? Most of the things we want are usually just that…wants. Defining wants and needs can be very subjective.
The more important skill to learn here is the ability to say NO. One way that I taught my kids this was to give them budget, for instance when we were buying school clothes or school supplies. Knowing that budget went a long way to helping them learn to say YES to the things that were more economical and NO to things that were too pricey. They knew that they could either buy one pair of very expensive name brand jeans or one pair of target jeans and 3 tops for the same price.
Impulse buying will get your child into trouble in the years ahead as they go into adulthood. That’s why so many young adults get themselves into credit card trouble. As much as we’d love to give our kids everything they’d like to have, and even if we can, we shouldn’t. NO is not a dirty word and one that your child will be better knowing how to say to themselves in the long run.
Sometimes they will learn NO when they go shopping and see how far their money will actually go, and sometimes they will learn NO when they come to you and ask you for something. I’m not saying you should say NO just for the sake of not always saying YES, but do think it’s important to say NO when it makes sense. NO, we don’t have that in our budget right now. NO, we can’t buy that because we are saving for something else. NO, that’s not a priority for us right now; we’d rather save for something that is.
How to be Generous.
Have you ever felt this way?
My kids have more than I ever did, but they don’t seem to appreciate it.
Christmas and holidays are so commercialized.
How do I help my kids want to give instead of always wanting to receive?
We all want to raise children who feel good about giving to others, but generosity does not always come naturally to children. It’s up to parents to instill compassion and generosity by leading them and showing them how.
- Teach the importance of sharing, starting at a very young age. Even if you think they are not grasping it, a gentle reminder done consistently will help them understand the importance of it.
- Model generosity. Let them see you give to others, not to pat yourself on the back, but to show them an example of giving.
- Do it together. Ask your children to help you pack up donations of clothes or fill Christmas shoeboxes or deliver a meal to a friend. Serve with them in feeding the homeless. One of the best Christmases we had as a family started very early in the morning when we met at our church to cook breakfast and then go out into the community to serve it to the homeless. My kids have never forgotten that. Ask your children to help you when you pack up donations of clothes or household items or when you help a friend. Spend an afternoon at a food bank or at a community clean-up project.
- Create opportunities. Look for ways that your children can give time, contribute money or donate personal items. For example, you might visit an elderly neighbor who can’t get out, choose a charity to support or a family to adopt for the holidays.
Children usually want to help; they just don’t always know how they can make a difference. Coach them forward in this and watch their joy as they learn the rewards of generosity.
Your goal should be to make generosity a lifestyle. When that happens, your children are more likely to grow into kind, charitable, and giving adults.
Money is a tool. It’s necessary for living in our society. But the trick is teaching your children to control money and not let money control them. With these foundational principles, I believe you will succeed in doing that.
If you’d like help in getting your kids started on learning generosity, I can help. I’m a family/parenting life coach. Schedule a free intro call here.