Money and finances are some of the most difficult topics to discuss within the family. According to a survey conducted by T. Rowe Price sampling, 1,014 parents of kids ages 8 to 14 years old, 69 percent of parents are reluctant to discuss finances and money matters with their kids. But our attitude towards money can heavily influence how our children will handle their finances, underscoring the importance of being intentional with the financial lessons we impart. So here are four easy ways to start demonstrating healthy financial habits for your kids.
1. Stick to Healthy Financial Habits
Essentially, parents should lead by example by sticking to healthy financial habits. Unplanned purchases contradict your lessons on budgeting. Strengthen your kids’ grasp of the concept by involving them in creating the weekly shopping list. Then, when you take them to the grocery store, stick to the list while shopping. Maximize the value of your dollar by taking advantage of discount coupons and comparing prices. Sharing your budgeting process will help them better grasp the concept of living within your means.
2. Resist the Urge to Spoil Your Kids
Spoiling our kids can weaken the concept of money as a reward for work. Whenever possible, introduce age-appropriate work to kids like selling lemonade, babysitting or mowing the lawn. This action will help them appreciate the value of money more. By earning their own money and using it to purchase items they want, kids learn the value of money and also begin to understand the concept of saving for future purchases. A weekly allowance given for completing household chores can also be a great way for kids to start having control over their own finances at an early age.
3. Save for Big Purchases
Saving money can be a difficult concept for kids to grasp—especially in our high-tech world where Amazon packages can be delivered within 24 hours of purchase. It’s important to teach kids about putting money aside for things they want but don’t currently have the funds to purchase. Open a separate savings account for really big purchases like a family vacation or new car. Share the entire process with your kids. Write down the total amount of money you need for your purchase and have the kids track the progress of your deposits.
For smaller items like a new dollhouse or skateboard, have your kids put money into a large jar or even a shoe box. Write the item they are saving for and the dollar amount needed on the jar or box. Then help them find ways to earn money for the item and track their progress. This makes saving money fun and also instills the concept of only purchasing items when you have enough money set aside.
4. Teach to Give Within Your Means
Lastly, money management for kids wouldn’t be complete without introducing the idea of giving. Aside from working to earn money, spending within your means, and saving for a rainy day, giving is a valuable financial concept a child has to learn. After all the needs of the family have been considered, donating to charitable causes is a great way to teach thankfulness and generosity. By seeing their parents engage in acts of altruism, children can better grasp the importance of helping others.
Teaching Kids About Money Leads to Healthy Money Management
Inevitably, kids will learn about money from someone. They can learn it from a celebrity with ambiguous spending habits, from their teachers or even from the parents of their peers. For parents, teaching kids about money should be purposeful and help them develop sound financial habits.
Teaching about money and basic financial concepts is the first step towards effective money management for kids. By starting kids young, we can help them understand the concept of money and show them how money affects so many areas of our daily lives. Giving them this knowledge at an early age can aid in the child’s future financial management skills.