We’d like to give our children everything, but one of the best things we can do is to teach them to earn what they want, or at least save for it. It may hurt us to say no (especially when they start whining or crying) but they need to have these money skills. And it’s never too late to start. You can teach kids about money the minute they learn how to ask for things. Here are some ways to do just that.
First, start with a piggy bank. Kids learn best through concrete things and a piggy bank gradually growing heavier with coins they had put away will make saving more fun than numbers in a passbook. By all means open an account for them, but let them accumulate those coins first, so they have the satisfaction of seeing their money grow (literally) before depositing it in the bank.
Another important skill is self awareness. Teach them the difference between want and need, and to set priorities. For example when they beg for something in the store, ask them to think about it and see if they still feel the need for it the next weekend. Remind them that every cent they spend is a cent less for something else. “You can buy that action figure, but then it will take longer for you to save for that computer game. What is more important to you?”
Let them experience managing their own money. Even little kids can be given an allowance, so they can learn to make smart choices and experience the consequences of making stupid choices. Don’t rescue them! For example, if they spend all their savings on a toy, and then the next week they see something they really really need, don’t step in and “lend” them the amount. “That’s what happens when you don’t plan ahead,” you say. They’ll be very upset, but it’s better that they learn this lesson now then when they’re adults, and the stakes are so much higher.
Once they get the hang of things you can teach them how to allocate money. Give them four jars to fill with coins, labeled “Spend/Share/Save/Invest.” Let them set targets for each. How much can they spend this week on food, etc. How much can they share to the community (like the church collection). How much can they put in their bank account? And how much can they set aside for a big toy or gadget that they really like?
Read our article on how NOT to talk to kids about money to find out other ways to teach them important money skills.
Photo from makemoneyhome.cjb.net