We get a lot of questions about how to teach kids about money, and for good reason! Every parent wants their kids to develop the skills to be successful and live a meaningful and impactful life and we all know that money management plays an important role. When considering engaging your children (or any young person in your life) about money, here are some principles to remember:
- More is caught than taught. Even if you work on purposefully teaching your children about money in a systematic method, they will learn far more from how they observe you engage with money. This means that the first step to teach your kids about money is to make sure your financial house is in order. How do you talk about money when you are at the store? Or what do your kids overhear you say about money to your spouse or your friends?
- You learn to manage money by managing money. What are some ways you can equip your children to start managing money? Remember to start small and simple. You could start with a budget for a summer trip or back to school clothes. Take the time to talk with them about what is important to them and how they plan to spend their money. Give them the cash instead of keeping track of what you spend on your card. Cash is tangible, it helps them recognize their independence in their choices and it is easy to see how much they have left. Discuss their choices with them along the way, but let them make their own choices and experience the results. Finally, if they are unhappy with their choices after the fact or ask for more, stick to the budget you determined and help them to evaluate how they could have made better decisions. This last part may not be fun, but it is actually the most important because good financial management is determining how to allocate limited resources among unlimited possibilities.
- Share your situation. We have a tendency to keep our finances very private, but consider sharing with your kids about your family finances and budget. You will want to share different pieces and in different levels of detail depending on their age and in ways that are relevant to them. If you have a conversation about saving water, consider showing them the water bill. If you have a teenager who is excited about getting a car and driving, share with them what you have spent on vehicles, your insurance costs, what gas costs you every month and repair costs. Help them gain real world understanding through your experiences.
Tell us what you have done with your kids to teach them about money! Please take a moment to write us a note (some of our best ideas come from our clients). We would love to share your great ideas with other parents in the CoCreate Community.