Parents, feeling like an ATM these days? Me too!
Whether it’s my tween daughters and all their skincare products or my sports-obsessed son wanting the latest and greatest baseball bat or basketball shoes, it seems like my current life stage is money in, money out.
All the while, we’re trying to teach the kids important lessons about money.
What do we value?
Is it in the budget?
If we buy this, then we have to say no to that.
In the busyness of life, how can we best teach our kids about the value of money and show them it doesn’t grow on trees?
From parent to parent, I’d like to share three quick methods that have supported my efforts in helping my kids understand money:
1. Give your kids a budget
When applicable, give them a budget and let them make choices based on the boundaries given. This is one of the best ways to teach your kids good money management skills early.
My favorite example of this is when shopping for their friends’ birthday gifts (so many birthday parties!). Shopping for birthday gifts used to stress me out, but now I look at it as an opportunity to create a money lesson for kids.
Simply give them a set dollar amount that they can spend; then, they have to find the gift(s), wrapping/gift bag, and card for under that dollar amount.
Kids are often motivated to give “the best gift ever,” so this exercise also helps them think about being resourceful when it comes to saving on the wrapping and card. Who doesn’t love a homemade card, anyway?!
When your kids are in control, every dollar matters to them so they can give a thoughtful gift and not just aimlessly spend money.
Another example of giving kids a budget is back-to-school shopping.
By giving them a set dollar amount, you’ll help them learn how to shop within a budget, understand opportunity costs (if I buy that, then I can’t buy that), and appreciate the value of money.
This exercise allows them to think about what things cost, how to stretch the dollar, and what their values are when it comes to making a purchase (quality, quantity, etc.).
2. Have your kids find opportunities to earn money
All ages can help out around the house to earn a commission, rather than paying kids an allowance for zero effort given.
Chores for allowance offers them an opportunity to reap the reward for their efforts put in. And those who go above and beyond may be compensated more for their efforts…just like in the real world.
No work, no pay!
Earning their own money also gives kids some independence and provides an opportunity for them to learn lessons about spending, saving, and giving.
Plus — bonus for the parents — the house is cleaner, dishes get done, and our trips to Target are cheaper!
My response to their many not-on-the-list requests while shopping: “Sure, go ahead. You can buy that with your own money if you’d like, but I’m not going to.”
3. Start stressing the importance of giving and saving
Spending money is easy to do, so help your kids learn about giving and saving too.
The joy of giving and the discipline of saving are feelings they need to experience to understand.
Giving can be to your local church, charity, or even a global cause that your family decides is important. Or, maybe your child would like to research a cause that is important to them, such as animal shelters, children in need, or disaster relief.
Their contribution, no matter how small, can make a difference for others. It’s important for your kids to see that they can make a positive impact in our communities and our world.
For example, our family sponsors a child overseas, and the kids feel personally compelled to financially help her because they witness how our small donation makes a big impact on her life.
The small sacrifices we make each month help to make a big difference for someone else in need of clean water and food to eat.
Meanwhile, saving money can be easier for some kids than others. One child may feel the money burning a hole in their pocket immediately, while the other child may want to stash it away for years and never touch it.
Keeping a house rule about what happens with the money they earn (e.g., save 10%, give 10%, and allow the rest to be spent) helps put boundaries on their finances.
As parents, you can come up with a house rule that works for your family and gives your kids guidance on how to save, give, and spend on wants and needs.
Financial literacy for kids can lead to future financial success
If you’ve listened to the “How We Money” series of our Common Cents on the Prairie™ podcast, then you know that we all have a money story.
Often, it involves lessons we learned during our childhood: some good, and some not so good.
As a parent of three, these lessons are now coming full circle as I try to educate my own children about money.
I’m sure my kids’ future money stories will each have an interesting chapter about how their money-managing mother influenced their relationship with money… Crossing my fingers that it’s a positive one!
If you have questions regarding financial literacy for kids or would like further guidance on helping your kids understand money, please do not hesitate to reach out to me. I would love to have a conversation about how our team can best serve your family’s needs!
