Think back to when you were a kid. Do you remember how your family dealt with money and how you felt about it? Did your parents constantly argue about spending money so when you grew up you thought that spending money on anything was bad? Did your family get a new car every year and then when you were on your own you realized that there was no way you could afford to do that? Do you remember wanting to go out to eat like your school friends did and your mom told you she couldn’t afford that and you started to wonder if you’d have enough for food because as a 5 year old you didn’t realize eating out is more expensive than eating in? You learned these money lessons whether your parents meant for you to or not and you can teach your kids different money lessons.
The truth is, how you handle money and what you say (or don’t say) about it will make a difference to your kids. So change the culture around money in your house. Instead of just saying no to your kids about money explain why. Explain that money is a choice. You only have $10, you can either buy candy or you can save until you have $20 and can buy the toy you really want. Instead of saying “we can’t afford to go out to eat”, say “we’re saving for a vacation or saving to fix the car instead of eating out right now”. Here are 5 money lessons to teach your kids about money and how to grow into a financially responsible young adult.
1. Lead by example. Make sure the message your kids are getting without you paying attention isn’t that they can always buy what they want. Make sure they see that budgeting is important and it’s important to wait and save up for big purchases. For example, you buying the new toy that you want, but don’t need shows them that they should be able to do that.
2. Open a joint savings account with each of your kids. Show them how to be active savers. This was one of my favorite money lessons my parents taught me at a young age. We opened an account at our local bank and enrolled in a kids savings program. Be sure to check with your bank to see if they have anything special for kids accounts or even just learning materials. Allow your kids to keep a little bit of money at home for smaller purchases, but help them learn that they will need to save until they have enough money for bigger purchases. Help them deposit cash and check gifts that they receive for birthdays or holidays and show them how their balance grows each month with interest.
3. Teach delayed gratification. When your kids come with you to a store make sure they know that they don’t get a treat or present every time. When your kid asks for the biggest dollhouse in the store and you say no (since you already have a dollhouse at home) make sure that the message is “not today” or “no, we already have one at home” instead of “no, we can’t afford that”. Whether or not you can afford the toy they want, you’re saying no because you’re teaching them that they don’t need things to have fun or because you’re the parent and you’re allowed to say no. When you start saying no and using “I don’t have money” as an excuse, your kids will pick up on that and the message that their family is poor, whether or not it’s true, will stick with them.
4. Donate to those in need. Do your kids have extra toys around or even clothes they’ve outgrown? Teach them that there are families who aren’t as fortunate who don’t have toys to play with and encourage them to fill a box to donate at least twice a year so that other kids can enjoy the toys and clothes they no longer use. If you do this right before their birthday or a holiday when you expect them to get a few gifts, you can instill the message that they are helping other kids and your house won’t overflow with toys.
5. Talk to your kids about saving for the future. Depending on the age of your kid, you can tailor this conversation, but it’s important for you to tell them if you’ve started saving any money for them to use for college or even the importance of them saving up for college. Tell them how you saved up to buy the house you live in now or your car. Even stories about how you saved so that next year you can go on a family vacation will let them start hearing about savings and about how something fun comes after you save and that’s just the message you want to send.
Not only do you want to make the right money choices for you, but you always want to make the right choices for your kids. Teaching your kids these 5 fundamental money lessons will set them up to be successful in the future. Have you taught these lessons to your kids? Are there other money lessons you think need to be taught too? Read how to get your spouse or partner involved in the budgeting process.