I don’t have kids of my own, so I asked my colleague Stacy Antrobus to help write this post. Stacy is the Practice Manager at Precedent AM and has two young children that she is teaching the value of money and the role it plays in their lives.
Passing down values related to money is one of the most crucial, yet challenging, tasks for parents today.
A child’s experience with money during their developmental years can shape how they save, spend, and give for the rest of their life.
By setting a positive example, and having meaningful conversations with your children, you can teach the following three key lessons about money management.
Teach them how to save
Helping children think beyond current wants and desires is not easy, which is why demonstrating the value of saving up for something is best accomplished through real-life examples.
To help your child think beyond current wants and desires, they need to first understand that the money they receive is directly tied to the work they do.
For example, you could create a chart that lists chores plus the pay rate for each of those chores. Loading the dishwasher might be $0.75, taking out the garbage could be $1, vacuuming for $2.
When your child asks for a toy, let them know that they have to buy it with their own money now — or that they save their money and buy something they REALLY want later. Help them count how much they have available and then how much more they need to earn to buy the toy.
Of course, there are many other examples and exercises to teach children the value of a dollar saved. The key is to explain the concept along the way, so children both hear and see best practices in action.
You may also expose your children to long-term savings by bringing them to appointments with your financial advisor. These trips can give you the opportunity to explain the things you are saving for — like retirement or college funding — and can demonstrate to your child the importance of planning ahead.
Teach them how to spend
While it’s hard to let you kids fail sometimes, teaching them that actions have consequences is a lesson that goes far beyond money.
Rather than telling them, “no, you can’t buy that,” it’s okay to let them experience the process of spending their money so they can learn when it’s gone, it’s gone.
Another valuable lesson is to look at what options are available and how to comparison shop for prices and quality.
Guiding children in simple choices now will give them the experience and confidence to make their own decisions as they grow.
Teach them how to give
Teaching kids about giving can be rewarding for both parents and children. Learning about giving and helping others gives kids a feeling of empowerment.
There are many ways a child can learn the value of giving. Setting up a charity box in the home can show how even a little bit of money can make a difference when given with a good heart. Encourage them to donate old toys, school supplies, and clothing to other needy children.
It is also a good idea to teach your little ones that donating time is often just as powerful as donating money and things. Take the whole family for an outing serving dinner at a local soup kitchen or make a habit of keeping a basket of fruit or snacks in the car to give to hungry people in need.
Encouraging everyone in your household to participate in volunteer activities is a great way to reinforce charitable values in your children.
By teaching your children that money needs to be earned, saved and shared responsibly, they stand a better chance of being able to successfully navigate their own finances as an adult — and rely less on you!