5 Tips for Teaching Kids About Money
Teaching kids about money is one of the best things you can do as a parent. In today’s society, kids want the latest electronics and named brand clothing. It is easy as parents to give in to these requests, but should we? I’m going to go out on a limb and say while it’s nice to have the latest gadgets and nice clothes, kids need to learn the value of the dollar early on.
If we continue to spoil our children and give in to every request, what is going to happen to our children when they go out into the real world? So how do we teach our kids about money? This is probably easier said than done but I’ve put together a few tips to help all of us out.
Teaching kids about money: Tips that work
Make them Save
Have a set rule in your home that when your son or daughter gets money, they are to save a percentage of it. It should not matter whether this is birthday money, Christmas money, or money earned from working, they still need to put a set percentage away. This will teach your child good money-saving habits and make them realize that not every dollar is for spending on the fun stuff.
I think as parents we sometimes forget that it is okay to say no! Just because or kids want something doesn’t mean they need it, we need to teach them early on the difference between wants and needs.
Teach your son or daughter the power of negotiation. Negotiation skills are important in every adult’s life, so teach your child this skill now. If your son or daughter wants the newest video game, negotiate with them. Maybe they will have to earn 100% of the game by doing chores or maybe you will tell him or her they have to save up 50% of the cost.
Include your children in the family budget. Now I’m not suggesting you go into all the nitty-gritty details and money problems with your child. However, you can include your child when you are making the monthly budget. Allow your son or daughter to see how you budget for household utilities, food, spending, and other items.
Tip: Have your child create a mini-budget when they get or earn money.
Teach Kids About Credit
A lot of parents do a great job talking to their kids about saving, but they forget to talk about the importance of good credit. Once your child is a teen you should talk to your teen about the importance of good credit on a regular basis. If your child doesn’t know how important good credit is they could end up in a world of hurt the day they turn 18! All of those fancy credit card offers start arriving and the 18-year-old starts swiping the card. Make sure he or she understand interest rates, minimum payments, and what happens if you miss a payment.
Each of these tips will help with teaching kids about money. As the kids get older they can be more independent and be good stewards of their money. And you can be assured that they will always have what they need.
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Those are great tips! A lot of them we have implemented, but there was another one that maybe others would find helpful. In our family, we are big on letting the kids be able to choose, what they wear, what sport to play, and what they will spend their money on. For us, we give them an allowance each month. In return they are expected to do chores and be helpful, and encourage a positive attitude. The money they receive is to be used for anything they want to buy (after tithing). If they want those awful lunchables, its on their dime. But, they are also expected to buy their friends bday presents, they buy some of their clothing, costumes, pumpkins, gum, extra toys, or anything that is not a necessity (like food, shampoo, toothpaste). So yes we are letting them blow their money if they choose, but we also explain things as they make their decisions so they have the options, but for us we would rather them learn the lesson young, that if they spend all the money they earn or have, there is nothing left over for the fun stuff. I would rather them learn the lesson with $20 vs. $1500. My brothers blew through tons of money over the years and it was a painful process because they were dealing with 1000s. It doesn’t work for everyone, but with our oldest we have seen big improvements. He thinks before he buys now because many times its HIS money. Telling kids they must save ____% works well too. My in laws did this and their kids were good money managers, but they are naturally that way. My parents had the same rule and some of my siblings took a long time still to really learn it. Just an extra idea to help kids internalize their decisions. Not perfect, but no parenting tactic is;)
Thanks for that tip Tami! I agree that people view their money much differently when it is theirs and not someone else’s.
I grew up in Hungary and I have never had a credit card in my life so it was very important that the topic of taking credits was also among your tips. I will bring the subject up with my husband I am curious what he thinks of this. Our son is a baby so we have plenty of time. I think I can relate more to the idea of teaching kids to save up some of their pocket money and I agree that you have to differentiate between wants and needs. That must be a tricky lesson. I imagine kids normally get what they really need and their desires are more about what they would like. 🙂