Money can be a tricky topic for many parents. It’s an emotional subject, and it can be instinctive for many people to avoid discussing it at all, let alone with their children. However, financial education is an important part of raising children to become responsible, well-rounded adults.
So, how can you tackle it?
The way you talk to your children about money will be a personal choice, but as a general rule, you should aim to educate them about responsible spending, saving, and budgeting at a minimum. With that in mind, let’s look at how you can make money management part of everyday life for your children.
Get Them Saving from an Early Age
Many parents give their children an allowance in exchange for good behavior or completing chores around the house. Not only does this teach children the value of working to earn money to be able to buy the things they want, but it can also be a good lesson in saving.
Some parents hesitate to give their kids money for work they should be doing anyway, but it’s important to find some creative way to get money in your kid’s hands.
The thrill of pocket money can lead them to rush out and spend it all on sweets straight away – but after a while, they’ll learn that they need to save up to buy something bigger.
There’s no child version of a credit card (unless you’re one of those bold parents who allows their child to be an authorized user), so saving teaches them patience and the importance of holding off on small, insignificant purchases in favor of a bigger purchase or emergency expense in the future.
Be Open About Household Budgets
One great way to start the conversation about finances in your household is to be open about household budgets. For example, you can take your children grocery shopping with you and do any of the following:
– Show them how items are priced differently (e.g., cost per ounce or unit)
– Discuss the overall price you’d expect to pay for your weekly shopping trip.
– Explain the balance between quality and cost + how to find the best value
You can even get them to help choose items when they’re older. Allocate them a meal per week to select and purchase. Set a budget, let them go around the store with you, and choose the items they need. This is a safe environment for them to learn about day-to-day expenses – once they get to college or move out, they’ll be grateful that you showed them how to budget.
Let Them Get Involved in Day Out Planning
Another great way to teach children about money is to involve them in your day out or vacation planning. Most of us will have a set budget or rough amount that we’re happy to spend on a vacation, and will base our activity or restaurant choices on this predicted spend.
Older children can help you plan a day out – not only will this teach them about budgeting, but also proper planning and logistics.
You may also want to use this chance to talk about what to do when things don’t quite go to plan. Having an emergency fund is a vital part of financial stability and safety.
A Better Financial Future
It can be hard to talk about money, but doing so will leave your child better prepared for when they go out into the world as adults. Whether they’re planning on going to college, or jumping straight into the world of work, a good financial grounding will set them up for success and healthy financial habits going forward.
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Looking for more hands-on guidance to help your kids learn about money? Check out Totalcents.com, founded by an experienced financial planner who finally got fed up with the traditional “avoidance” mentality regarding how we interact with our kids regarding personal finances.
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Watch our webinar recording: Why Your Kids Should Learn Personal Finance Early