How Best to Teach Your Kids About Money

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It’s not always easy talking about money.  We’ve grown up thinking that’s it’s a taboo subject.  But yet, if it was talked about more in our society, we’d have fewer problems with money.

If someone gets into trouble with money, they could ask a family member or a friend for advice and suggestions instead of trying to do it all alone.  This might help us to fix our money problems instead of getting more in debt since we don’t know how to get help or are too ashamed to ask for it.

When it comes to our kids though, we should be talking with them and being more open with them about money.  Let them know it’s okay to talk about it and ask questions with you.  The more we engage with our kids about money and teach them about it will allow them, as they get older, to be more comfortable talking about it and getting help when they need it.

They’ll have a better understanding of it, know how to manage money properly, and know it’s okay to screw up.  We all screw up at times but the important thing to know is just because you mess up doesn’t mean you give up.  You get help, learn from others, and fix the mess you’ve made.

By teaching our kids this, they’ll learn the foundation of good money practices.  And honestly, if you aren’t educating your child with smart money choices, who will?

Start Young

We can start talking with our kids at any age.  But the earlier we talk with them, the better.  My kids are 11 and 8 and we’ve talked to them about money since they were each about 6.

Keep it simple if they’re very young.  Talk about how much things cost at the store.  Teach them the price of milk and bread.  Teaching them that everything we buy cost money starts the foundation that money buys things.

Allowances

Then, when they’re about 5 or 6, you might want to consider giving them an allowance.  We give our kids half their age each week.  So my 8-year-old gets $4/week.  It’s up to you if you want to tie allowances with chores or not.  That’s a personal preference and I’m not going to get into that.  Each family has to decide for themselves what is right for them.

Once we started giving our kids allowances, we made them pay for the things they wanted.  If we were at a store and they wanted to buy something, they had to buy it with their own money.

I have a friend that makes her kids pay for food when they go out to eat or when they order in.  She charges them each $1 when eating out and $.50 when ordering in (like pizza or take out). I like this idea but we haven’t started doing that yet with our kids.

Both of these methods teach the value of money.  They teach kids that they shouldn’t take money for granted and that everything costs money.  This is important for kids to understand and this will teach them how to manage money properly.

Savings

Another thing we do with their allowance money is to have our kids put some of it into savings.  So if my younger son is getting $4/week, he needs to put $1 into his savings.  This is teaching my kids the value of saving which is so important as they get older.

Once you’ve started with your child on the importance of saving money, they will start to understand the principle of saving up to buy something.  This is an important skill for them to learn.  It will teach them how to save up for something they want to buy and help them understand if you are saving up for something.  During that time, you’ll probably have to sacrifice on some things and this will help your child to understand it better.

If your child is saving up to buy something with their money and if they ask you to loan some of the money to them to get their purchases quicker, don’t give in.  Waiting teaches them an important lesson that we don’t spend money we don’t have.

Credit Cards

Once your child is old to understand, teach them about credit cards and debt. It’s necessary to explain credit cards and have open conversations about them before they’re 18 years old.  Let them know how credit cards work and the trouble you can get into with them so hopefully, they don’t make those mistakes.

 

Final Thoughts

 

Understanding money is a learning process.  The earlier you can discuss money with your child, the better off they’ll be.

Remember, start simple when your child is young.  Consider giving them an allowance around the time they’re school-aged.  Teach them smart money practices, the importance of saving, and waiting to buy something until they have it saved up.  When your child is ready to understand, teach them about credit cards.

Teach them these important life skills so they are better equipped to manage their money when they’re out on their own.

What struggles do you have with money?  Share them in the comments, I’d love to hear from you!