It’s never too early to start teaching children about the essential life skill of money management, but where do you start? Consider the following ideas:
Have open discussions about finances
You teach your children so many life skills before they are even school-aged (i.e. potty training, walking, talking, stranger-danger, etc.); why wouldn’t you also want to teach them about managing money? It’s not taboo to talk with your children about family finances. In fact, it’s an essential life skill. Encourage them to ask questions and provide them with age-appropriate answers. Actively teach your children about money so they can learn the right lessons.
Teach by example
Children are little sponges and they learn a lot just by watching and listening to you. Even before they can talk, they will master the art of asking you for things when they are with you at a store. Anticipate their checkout line requests and be prepared with an appropriate answer. While you may be tempted to give in to their demands (or tantrums) or to answer with a simple “no,” make the moment a teaching opportunity and explain to them the reason why they can’t have what they desire. It’s okay to be honest and tell them you don’t have the money to buy them what they want. If need be, take out your wallet and show them that you don’t have the money. And then back up your words by your example and refrain from purchasing things that you don’t need.
Give visual examples
If your children are old enough, show them your checkbook or online bank statement, and let them see where your family spends its money (i.e. rent/mortgage, food, gasoline, car payments, etc.). For younger children who are able to count to ten, consider a simple money counting game as a visual lesson. Put five pennies on the table. Give them a pretend example that a piece of candy costs ten pennies. Have them count out the pennies. After counting the five pennies, they’ll realize that they don’t have enough pennies for the piece of candy. Explain to them, at their age-appropriate level, how that relates to your family’s finances.
Provide a good work ethic example
Money doesn’t grow on trees; you have to work for it. Explain to your children why you go to work every day, and how you get paid for the work you do. Consider demonstrating this principle by giving your children an allowance when they are old enough to understand that earning an allowance is conditional upon work. Many families believe that children should contribute to household chores (without receiving an allowance) simply because they are part of the family unit and everyone is expected to do their share. If that is the case in your home, create an additional and unique list of chores for pay that are above and beyond what your children are expected to do on a weekly basis. Regardless of how you administer allowances, be sure to follow through and make sure your children have completed the work. Explain to them how it works in the real world and how silly it’d be for you to never go to work but still expect your boss to pay you.
Encourage older children to get a job
One of the best ways to teach older children about money management is to encourage them to get a job during their high school years. They will see in a hurry how much they have to work to earn just a little bit of money, and how quickly that money can disappear if they choose to spend it frivolously. They will quickly learn their worth as well as a host of other life skills including interaction with bosses and peers, service to others, time management, etc.
Begin the life lesson of financial literacy now
Remember, it’s never too early to start teaching children about money and money management life skills. The time to start is now and FamilyMint.com can make that lesson easier by providing a fun and educational way for children, with the help of their parents, to manage money and build financial literacy. Their easy and intuitive award-winning online money management application has helped thousands of parents raise money-smart kids by teaching them about financial goal setting, and forming the types of financial habits and behaviors that will lead to financial success.
FamilyMint's 60 page step-by-step workbook and online money management application are a great way to begin teaching this essential life skill to your own children. Learn more about the program at FamilyMint.com.