Out of all the things you try to teach your kids, how to handle money might not be at the top of the list. Maybe you think your kids are too young, that they’ll learn about it in school, or that without a significant source of income, they don’t need to learn good money habits.
The truth is, kids want to learn about money, and the earlier you get them started, the more prepared they’ll be when they have some real money of their own. But having conversations with your kids about money can be difficult. Here are four ways to help teach your kids about money.
1. Make Them Earn Their Allowance
You have to work for your money, so teach your kids that they have to work for theirs. Allowances can be wonderful ways to get kids started using money, but make sure they’re doing chores outside or around the house to earn that allowance. Simply giving your children $10 every week or two can instill some bad habits. On the flip side, letting them know their hard work will be rewarded can boost their work ethic and keep them motivated.
Also, give them opportunities to earn more. Maybe some of the more minor chores around the house are worth a buck or two, but something bigger like mowing the lawn is worth $10. Teaching your children where money comes from and how it is earned can help them have a greater appreciation for it.
2. Allow Them to Handle Their Own Cash
When your kids do earn their allowance, let them be their own money managers. Your child may want to spend a portion of what he or she gets immediately, and that’s okay. By letting your children have actual money, it becomes tangible. Because they are limited to the amount of cash they have on hand, your children will know exactly how much they are able to spend. It’s important to teach your children how to handle cash before they get to an age where they can use credit cards.
3. Stress Good Saving Habits
The occasional candy bar from the gas station or pack of trading cards from the grocery store is all fine and well, but let your kids know that if there’s something big that they want, like a new bike or a video game, they have to save for it. Once they’ve done enough chores and earned enough allowance, they can buy whatever they want.
By teaching good saving habits, your children learn that they can’t have everything they want immediately. It can also help teach them good budgeting and money management skills. By buying that candy bar now, how much more will they need to save to afford the video game they want?
4. Help Them Appreciate What They Have
It’s important to teach your children the importance of sharing and giving back to your community. Pass along the message that there will almost always be someone less fortunate than them, so they should appreciate the gifts and opportunities they have.
One way to do that is to encourage your children to donate a portion of their allowance. Even if they’re just dropping a handful of coins into the Salvation Army bucket every holiday season, this small gesture can help them realize the value of money. Then, as your children get older, let them choose causes they want to donate to. This can help them understand the difference between getting ahead and having enough.
There are countless other ways to teach your children about money, and it’s ultimately up to you to determine the right strategy for you and your kids. But if you’re looking for more tips on how to instill good money habits in your children, reach out to a financial advisor. After all, it’s never too early to start planning for the future.
