Growing Up With Money: Teaching Kids The Value Of A Dollar
What attitudes about money are you modeling for your kids?
I recall a conversation I had with my colleague, Brian, and his wife who were expecting their first child. He told me they were buying a $3000 stroller from New Zealand, for the baby they were expecting in 6 months.
Brian was just a rookie, and I thought three thousand dollars on a stroller plus shipping and handling from across the globe was a bit over the top!
It seemed pricey for a middle-income couple.
Here are ten ways to teach your children about money.
Children learn from what they see. Our children pick up our attitudes regarding money. You are the first person from which they are going to learn life’s lessons regarding work, self-care, what it means to have a healthy lifestyle, and healthy relationships. Are you also modeling a healthy relationship with money?
1. Start Young and Start With You
Personal U.S. household debt climbed to a record high of $15.0 trillion in the second quarter of 2021! It works out to over $155,000 in debt per household.
If we want to turn the tide on how we manage our money, we must start with our kids. And we need to start early! Even before our kids can count! And it has to start with you! What is your financial vision for your family? How are you at managing your money?
2. Open a Bank Account in Their Name
All banks have savings accounts for minors. Depending on the financial institution, you will have to be a guardian or trustee on the account. I can still remember when I had my first bank book as a child. I also remember the feeling of seeing my money grow.
3. Become Aware of How You Speak About Money and Wealth in Your Home
Your children will inherit your beliefs about money and wealth. What do you say about money in your home? That “there is never enough.?” or “money doesn’t grow on trees?”
What are some of the remarks you make regarding rich people? That they are somehow dishonest and entitled? Question your beliefs.
What beliefs would you like your children to inherit about money? How would you feel if your children became extremely wealthy as adults
Expressing limiting beliefs about money can negatively affect your children’s relationship with money.
4. Simple Budgeting
Teach your children to keep track of where it’s going. Download an app such as digit to keep track of your income and expenses. Depending on how your children are, they may wish to download a similar app for themselves.
Label three jars; spending, saving, and sharing. If they receive allowances or money from a side-hustle like babysitting or a summer job like mowing lawns, teach them how to prioritize their spending.
Budgeting is a great way to learn math besides learning about money. Even young kids can manage simple math.
5. Teach Them That Saying “Yes’ to Something May Mean Saying “No” to Something Else
If they are asking for a new gadget like an iPhone, discuss with them what they may need to say ‘no’ to afford the new device. Your income may be finite; you need to make choices regarding what you will spend on. What are they willing to forgo to get what they want?
An upgrade to a bike is a great idea, but it may mean having to sacrifice something else. Discuss the choices they make. It helps them create tools for increasing self-awareness.
6. Teach Your Children That Money Can Grow
As their money jars fill up, take them to deposit it into their bank account. It can be very empowering for them to see money accumulate over time when saved. An online financial calculator shows them the compounding effects of money saved.
Even with a low-interest rate on a savings account, over time, it does add up if you do not spend it! The reverse works the same — revolving debt that is left unpaid also grows.
Most credit card statements now show the impact on your balance if you do not pay off what is owing every month. Show your teenager what happens when the balance due on revolving debt is left unpaid.
7. Get Them Involved In Comparison Shopping
If they want a new bike, have them compare prices online. And have them compare prices on expenses for the house. They are part of the family, and they would appreciate helping you manage the household expenses.
8. Delayed Gratification Produces Success
A famous longitudinal study done at Stanford University in 1972 by psychology professor Walter Mischel found that teenagers who were able to delay gratification when they were preschoolers had better SAT scores when it came time for College.
Teach children patience by having them wait or save up for what they want. We tend to value things that required more effort to acquire. Allow them to put the effort into acquiring things — through time or work.
9. Let Your Children Discover The Joy That Comes From Sharing
Social Psychologist Elizabeth Dunn, a professor at the University of British Columbia and co-author of Happy Money: The Science of Happier Spending, found that people’s level of happiness is higher when they spend relatively more on others than on themselves. Provide your children as many opportunities as possible to experience the joy that comes from sharing what they have.
10. Talk About Things Money Cannot Buy
Have them list the many things money cannot buy, love, friendship, family, sunshine, and hugs. Cultivate in them an appreciation for all the things money cannot buy.
The joy from these last much longer than the satisfaction one gets from purchasing items. Studies show that experiences that produce these positive emotions bring more happiness than things ever could.
Children Live What They Learn
Money should be fun! Find ways you can make the subject of personal finance light-hearted. Create a family bucket list. Probe a little on the choices your kids make as to what they would like to see on the family bucket list. Expand their vocabulary around positive emotions and memorable experiences.
You may want to learn more about managing your money so you can help your children adopt healthy financial habits. Signing up for an online course on personal finance may help you feel more confident when it comes to managing your household finances.
Your Legacy
When we think about leaving a legacy for our children, we often think about the assets we want to accumulate, like the family home, the family cottage, our investment portfolio. And the values we’d like to teach them, Such as hard work, integrity, and kindness.
But let’s also’s lets also leave them with sound financial planning principles around managing money. Set an example for your children. Pay off your revolving debt. Save regularly. Set aside a rainy day fund. Put your financial house in order. They’ll probably thank you for it for their rest of their lives.
Jennifer Thompson has published Women and Money: 7 Principles Every Woman Needs to Know to Be Financially Prepared in Any Economy and Growing Up With Money: Raising Financially Resilient Kids in an Age of Uncertainty. You can reach her at [email protected]
