How to Teach Your Kids that Money Matters

There are two types of people in the world: those who know the value of a dollar and those who don’t. Most parents want their children to grow up and fall into that first category because they know that being responsible with money means having a happier, less stressful life in general. Financially smart adults don’t just “happen,” however. No, most people who manage their money well were taught to do so from an early age. So, how can you instill smart financial values in your kids? It’s easier than you might think!

Don’t Be Afraid to Include Your Child in Financial Decisions    

A lot of parents think that kids are “too young” to worry about money or financial issues. And, while your little ones certainly shouldn’t be fretting over your debt or family bills, that doesn’t mean you can’t include them in some financial decisions, especially those that relate to them. When you let kids assist with decision making or even make some decisions of their own, they’ll quickly see that their financial choices come with their own consequences and rewards. Here are a few strategies to try:

l  Include them in planning a party, an outing, or some other fun event. Explain to them how much money they have to spend and how they can only choose options within their budget.

l  When your child finds a toy or other item, allow him or her to save up for and eventually purchase that item. Don’t “save” your child if he wants to throw the hard-earned money away on a less desirable or impulse purchase. Let the child see how much longer it takes to finally achieve the end goal- the originally desired item- if he or she decides to splurge. Your child will learn from the experience no matter how it turns out!

l  Use a bank or other container to collect change with your child. Explain to your child that nothing can be purchased with the money until the container is completely full! This will teach a child the value of saving, and the difficulty of re-earning money once it’s been spent!

Lead by Example

No matter how hard you work to teach your child financial lessons, the biggest lesson is always going to be what you do in your financial life. If your child sees you constantly struggling to pay the bills, he or she will grow to think this is a normal way of life. Or, if your child sees you pull out the plastic to pay for every purchase, he or she will think this type of behavior is okay. Remember, children learn more from what you do and what they observe than from what you say.

As you can see, there are countless ways to teach your child the value of a dollar. Start enacting some of these strategies or coming up with some of your own. Remember, it’s never too early to learn that money (and how you handle it!) matters.