Teaching kids money smarts is one of those things that we all know is important but don’t usually spend enough time on. Kids learn how to count money at school… but that’s about the extent of their money education at school. The rest is up to us as parents. I want my daughter to grow up with good habits and values regarding money, so that’s why I’m teaching her all about it now. Young kids are often enamored with the idea of money, so the sooner we can start teaching them how to be responsible with it, the better! Here are my tips for teaching kids money smarts:
- Talk about money often. Our generation grew up in households where talking about money was taboo. We have to do it differently for our kids if we want them to grow up with a well-rounded attitude about money. That doesn’t mean you need to divulge all of your financial information to your kids, but sharing some information is important. Make sure your kids know from a young age that the way you earn money is by working and teach them about the things you spend money on… specifically the different categories of want versus need.
- Give them an allowance and give them free reign. We often want to make our kids make good choices. But the best way for kids to learn to make good choices is to allow them the opportunity to make mistakes. We all make money mistakes during different points in our lives, so let your kids make as many $5 mistakes as possible. Pay them an allowance for doing chores and keep quiet when they blow all their money on junk. Find the teachable moments and have conversations around them… saving money to buy a more expensive item, why some stores charge WAY more than others for the same item, and why buying a quality item is better than buying a cheap version. I saw this magnet chore chart on Pinterest as an easy way to keep the extra chores close at hand to encourage them to make the decision to earn some more cash.
- Teach your kids to spend money on things they value. They say money can’t buy happiness, but I tend to disagree. It’s true that money won’t solve all your problems, but if you spend your money on things that make you happy, it’s hard to argue that you won’t be happier. If you love to travel, odds are in your favor that spending your hard earned money on a weekend getaway with your kids will bring you lots of happiness. If you’re a foodie, dinner at a fancy restaurant might be just your thing. Let your kids learn this one by following your example… and make sure to talk about why you spend your money the way you do.
- Change the way you talk about money. The phrase “we can’t afford that” is pretty ingrained in our culture. We tend to say it all the time…. Even when it’s not actually true. Most of us will never be able to afford a million dollar home or our own airplane. But there are many other things in life that we could afford, but we choose to spend our money differently. Instead of saying “we can’t afford that”, next time try “we could spend our money on that, but we’d be happier if we spend our money on ___.” Changing the language we use around money can actually change the way we think about money and that’s a good thing!
- Teach your kids about checking accounts, savings accounts, credit cards, debit cards, and loans. I remember learning about money management in high school. It pretty much consisted of learning how to do the math involved in balancing a checkbook. As adults, we all know there is SO much more to learn about financial responsibility than how to subtract out checks you’ve written. Kids as young as 10 years old are ready to start learning what happens when you charge something on a credit card, how a car loan works, and the differences between checking and savings accounts. Give your kids the chance to learn to be responsible by co-signing on a few accounts designed especially for teens. Dave Ramsey’s daughter wrote this about what kids aren’t taught in school… and I couldn’t agree more.