Our attitudes about money are learned at home from our parents It’s never too early to start talking to your kids about money. Even as young as 3 or 4 can understand saving money. Here are some important things kids should know about money.
Money is like sex. If you don’t talk to your kids about money, somebody else will and you may not like what they are hearing. Kids are fascinated by money, and they will find the answers to their questions. Those answers should come from you. Teaching your kids about money will give them a solid foundation upon which they can build their financial independence.
Important things Kids Should Know About Money
Spend within your means. Last Christmas Zoe wanted everyone to just give her money so that she could buy a video game console that she wanted. She was willing to give up any other gifts she could possibly get in order to buy this game console. So we asked her if she could afford to buy any games to actually play on this console. She suggested she spend her birthday money on games. With her birthday being in March, she was going to have a game console that she couldn’t use for 3 months. Plus she was going to need a television or a monitor in her bedroom which was additional costs she hadn’t considered. Needless to say, she did not get the game console, but she did learn an important lesson.
How to manage money. I used to periodically take my daughters shopping at Target and give each of them $50 to spend on whatever they wanted. This would be an all day excursion because they would try to get the most bang for their buck. That meant there would be numerous trips between clothes, shoes, makeup, music, and back to clothes, and jewelry and purses, and back to shoes. I would usually end up in the wine isle. They would learn to figure taxes on their purchases and juggle their items of choice until they had the best possible combination of things for their money.
Money does not grow on trees. There are things kids can do to earn money. I don’t believe an allowance should just be handed to kids. Let them do things around the house to earn some money. When they get older they can do things around the neighborhood to earn money such as raking leaves, mowing lawns, walking dogs.
The importance of saving. When I was first given an allowance, I got 4 quarters every week. My parents said that I had to save one quarter, give one to the church, and I could spend the other two. I hated setting that quarter aside to save. I wanted to spend it. But as the weeks went by, I saw my savings growing to $2 then $3. The more money I saved, the less I hated putting that quarter in savings every week. Teaching your children to save their money, or at least a portion of it, is giving them a solid foundation upon which they will build their financial independence.
We all make mistakes. As hard as it is to watch your child spend their money on something lame, you have to let them do it once in a while. It’s an example of return on investment. If they buy something and it’s not as fun as they thought it would be, they will remember that the next time they want to buy something.
It is important to have these talks with your children and teach them about money before they leave home. Talking about money gives kids the tools and information they will need to make smart financial decisions later in life.