As you may know, children pick up on what their parents do or say around them. Even body language has an effect on those little bundles of joy! If you’re slapping down plastic every time you go out to dinner or to the grocery store, they will eventually notice. If, at the end of every month, you and your spouse are arguing about money, they’ll notice.
The best way to ensure that your kids will understand real finances is for you to do the same NOW! What messages about money are you subconsciously sending to your kids? If you constantly put off paying bills, it is highly likely they will do the same in the future. But, if you are proactive about budgeting and spending your own money wisely, they will have a financial role model to look up to!
At some point you need to stop thinking and just START - even if you have to start small! When you start teaching your kids real finances as early as possible it helps set them on the right path, rather than steering them off a wrong path and back on to the right one.
Start with a clear jar that they can see everyday and use it as a piggy bank to save for a toy or item they would like. Watching money grow through the glass allows them to see the rewards of saving over a period of time. Each time your child makes a "deposit," make a big deal about it to show them that saving towards their goal is a good thing!
On your next shopping trip, let them bring their clear piggy bank to the store. Instead of just saying, "That toy costs $10," show them how much money they would need in their jar to buy the $10 toy. If they have enough, physically take the money out of the jar to show them how the exchange of money for goods works. If they cannot afford the item just yet, estimate how full the jar would need to be reach the price of the item and use a sticker to mark their end goal.
According to Dr. Phil, over-indulgence is one of the most insidious forms of child abuse. That is because spoiling your children does not teach them to work for what they want, but instead shows them they deserve something for doing nothing. Allow them to earn commission for helping out around the house or doing well in school. If you do not believe in paying children for chores or school, that is fine. Pay them commission on any work they do beyond your expectations. It's all about showing them that reward is tied to effort.
Once they start making a little money, be sure you teach them about giving. They can pick a church, a charity or even someone they know who needs a little help. Eventually, they’ll see how giving doesn’t just affect the people they give to, it affects the giver as well.
The most valuable gift that you can give your children as they age is to start requiring more of them and help them to be grownups. Imagine the joy and pride your children will feel when they can look in the mirror knowing they have made their own way, can stand solid on their own two feet, and have every right to celebrate their own accomplishments. Help foster their independence by requiring more of them — and of yourself.
Allow them to ask you questions they have and answer honestly. An easy way to start a conversation about money is reviewing the bill after eating out at a restaurant. Point out how 5 sodas can add up, whereas water would keep the total cost down. Talk to them, if you are comfortable, about what you do with the money you earn. This can help them see how much of their income they can expect to spend to live in a house like they grew up in one day. It's important that your children become comfortable with the topic of money, not scared of it. Allow them to see that they do not have to let money control them, rather they control it.
As soon as your kid turns 18, they will get hounded by credit card salesmen—especially once they’re in college. If you haven’t taught them why debt is a bad idea, they’ll become another credit card victim.
In what ways are you teaching your children about money? What was the best money lesson you received from your parents? We'd love to hear from you; feel free to share your thoughts on this topic to firstname.lastname@example.org.