We are at the toy store and I see my daughter walking the aisles, wallet fastened tight and clenched firmly in her fist while three stray $5 bills dangle loosely from her fingers.
This is kids and money.
We try to teach them to be responsible. When my kids started carrying money in their fists and in ziploc baggies, we made sure they got wallets. Don’t let your money hang out for all the world to see. But these lessons take lots of repetition to sink in.
We try to impart wisdom, but deciphering how to teach kids about wise money practices can be a daunting task. The challenge is worth the effort though. Here are a few tips to help you get started on the right track.
Talk About Money
It used to be that talking about money was taboo in polite society, but we can’t expect our kids to learn what isn’t taught. It’s the parents’ responsibility to impart financial know-how. So talk about money. Talk about what things cost, how you make decisions, why you prioritize what you prioritize, and how long you’ll have to work to pay off that car or that vacation or that set of braces. Kids need to know that there is real money behind the swiping of that card, that online transfer, or that quick stop at the ATM. Give them a vocabulary—budget, expenses, income, bills, loans, payments, debt—to wrap their minds around the reality of financial stewardship, and make the topic a safe one to discuss in your home.
Give Them a Chance
Some parents happily give out a weekly allowance for assigned chores; some parents have a principled objection to paying for household help. Whatever you do, find a way to get some money in the hands of your kids so they can practice managing it themselves. I personally wrestled with the idea of paying my kids for chores, not wanting to instill in them a “what’s in it for me?” attitude when it came to helping out around the house. But there also came a time when teaching them to manage money was important and I couldn’t teach them to manage something they didn’t have. My kids are not old enough to go searching for work outside the house, so we agreed that in our home there are non-negotiable chores the kids must do because they are part of the family and then there are chores that are eligible for payment. This gives them an understanding that pitching in is expected, but there are also opportunities to earn money for themselves.
While kids need a chance to get some hands-on practice, we can’t expect them to perfectly balance their own budget if we don’t offer some guidance. Determine what you value as wise spending practices and set some parameters for your kids. Do you want them to save? Do you want them to give some of their earnings away? Set the expectations now. At this point our kids set aside part of everything they earn for tithing and college savings. The rest they are allowed to spend as they see fit. Which leads me to my final point. . .
Let Them Make Mistakes
Sometimes my kids see fit to purchase things I would not choose for them. Typically, like so many of us, they get to the store with some money in their wallets and suddenly the possibilities are endless and appealing. They have purchased trinkets, passing trends, and junk food. They have pooled their money to buy stuffed animal number one zillion and one—the one they couldn’t imagine living without—only to soon abandon it, forgotten, in the corner of their room. These are important purchases, if only to remind them that once the money is gone it’s gone, and they have only their purchase, or the memory of it, in its place. They are learning that money is finite, though the choices about what to do with it are not. While they’ve experienced their own buyer’s remorse from time to time, I have also seen my kids save up for special purchases, say no to something now because tomorrow it will no longer be important, and take pride in owning something they earned through their own hard work.
Teaching our kids how to handle money wisely takes time and energy, but the payoff is well worth the effort. The speed with which someone can get into serious financial trouble with loans or credit cards is breathtaking—we need to do what we can to prepare our kids for the reality of financial accountability. Let them start now while the stakes are low. You and they both will be glad you did.