By Sarah Lybrand
It’s important to model good financial behaviors for your children, but it’s just as important to talk about money, both in front of – and with – your kids. Even better: combine modeling and talking and involve your kids in your everyday money behaviors and decisions. Doing this can lay a foundation of financial literacy that serves them the rest of their lives.
Here are a ways to start talking about money in ways that kids and teens will listen to and understand.
Talk to your kids about all the good (bad, and ugly) money moves you’ve made in your life, and what you’d do differently if you could. Better than lectures or lessons, stories are one of the most primary, basic way humans learn. Sharing yours with your kids can be a great way to impart your best financial wisdom.
The earlier you teach kids how to live within their means, the more prepared they’ll be for life. Show them how to budget, by walking them through it in a real world situation. For example, set a budget before heading to the store (and better yet, pay in a set amount of cash)—and stick to it while you shop, even if that means leaving an item or two behind. You can even let your kids add up the bill as you go.
Then, let them try it on their own. Give them a budget for back-to-school shopping, for example, or holiday gifts and let them make the decisions about how to allocate those funds.
Use family moments (around the dinner table, on car trips, etc.) to discuss how the family spends its discretionary funds. This is a great time to talk about the trade-offs of splurging on little things, versus saving up for larger purchases. You can even involve your kids in choosing (or even saving up a percentage themselves for) a big-ticket purchase like a vacation or a new family car—and keep everyone involved in both the progress, and process.
The same way kids are learning right from wrong, they’re also absorbing your attitudes, values, and habits around money. Lay a foundation of generosity by including charitable donations or random acts of kindness in your every-day money habits.
A three-jar system (one for spending, one for saving, and one for donating to a charity of your child’s choice when the jar is full) can help cultivate a spirit of giving. Involve them in decisions around the family’s charitable giving by asking them to suggest and research charities that support causes that they care about.
Our consumer culture is chock full of problematic tropes about money, such as “retail therapy,” and the idea that you can’t “spend it after you’re dead.” Try to cultivate skepticism in your child’s approach to spending—not only against financial predators—but also from the ideas, ads, and norms that cultivate unhealthy desires and buying pressure.
Though you can give your child lots of financial freedom to spend their earnings (an earned allowance, a summer job) as they like—it doesn’t mean they should always get what they want when they want it. Talk through your own buying decisions—and consider enforcing a 24-hour rule for your kid’s purchases over a set amount, say, $15 — as a way to curb the gratification that comes with impulse spending.
If you’ve scored a good deal, share it! Point out the coupons, bargains, and sales in real time while you shop—or tell your kids exactly how much you saved by resoling your leather boots rather than buying new ones. Kids love gaming the system—so inspire them with your most winning financial strategies.
As soon as your kid turns of age, they’ll start getting hounded by predatory credit card offers. Head off issues by teaching your children early on about how credit–and interest–works. Make sure they understand that credit is a tool that can help boost your financial security, but that they must use it responsibly.
Give your kids an allowance, and let them spend at least part of it as they wish. They’ll inevitably purchase something that quickly falls apart or spend all their money and have none left when they need it. If they can experience and learn these lessons as children, they won’t have to do so as adults–when the stakes are much higher.
Showing your child how to be satisfied with what they’ve got—and not always covet what others have—could be one of the most valuable money lessons of all. Happiness at any net worth, at any strata of society, is a lesson that starts within the family and in your own heart—but one that if talked about and cultivated, will turn your kids into fiscally responsible adults.
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