These days, Americans everywhere are in the midst of an economic crisis. Many are just one missed paycheck away from complete economic disaster. For decades, we have been encouraged to increase our debt, when it is really our savings that should have been the focus. Saving money is a habit that takes time to learn, and the best place to start is now, with your kids.
Tips for teaching kids about money
- “Wants” vs “needs”: We all need food, shelter, and water, but we probably don’t need that $600 pair of cowboy boots, or in the case of kids, that new video game (it’s going to be on sale in three months anyway, or used for half the price). When we establish what the essentials to living are, we can put away the money that we otherwise would have just spent on something that wasn’t all that important after all. We can stack up cash in savings for leaner times when we might have to struggle to pay our rent or bills.
- Teach them the value of hard work: Adulthood is a time where we gain a good understanding of what hard work can afford us, but we can start with our kids too. By paying kids an allowance for chores, it shows them the importance of service for a reward. The more chores that are done, the more freedom they can get from being able to decide what they want to do with their money. If you can appreciate the work it took to earn money, you are less inclined to blow it.
- Start with a piggy bank: Stashing cash, even if it’s just spare change or an allowance can build up quickly if it’s out of sight and out of mind. Once the piggy bank is full, graduate up to a bank account. This will not only keep their money safe for future use but will also establish a foundation for their credit score years into the future.
- Create a timeline and goals: Working with your kids to set goals is the first step in creating a budget. When you have an idea of a want or a need and a timeframe in which to get it, you can help them adjust their spending based on the cash coming in, and other expenses going out. Make the goals shorter so that they see immediate results, as with a small toy fund, and work your way up. In no time, they will be saving money for a car and looking to make more money with a part-time job.
- Lead by example: Kids notice everything you do. They are like little sponges for information, so if you struggle with making responsible choices and have a hard time resisting impulse buys, you are teaching them by example. Work hard to curtail your spending and reduce your debt, and it will become second nature to your kids.
- Don’t be afraid to talk about money: Kids are often kept separate from discussions about money. One reason for this is that money problems cause stress within a household. Disagreements with how money is spent is a leading cause of divorce in the US. Instead of sheltering kids from money, be open about the subject. Answer any questions they have. Once they begin to understand the value of work, income, and savings, they will have a healthier relationship with money.
- Make saving fun!: Saving can be a lot of fun — Whether it is playing board games like Monopoly or Life, or just setting goals and trying to beat them, the rewards of managing your money well outdistance the tragedy of bad decisions by a long shot. Make stashing away cash a competition and you’ll see your kid working harder to win!
Start them young
Help your kids create strong financial habits throughout their life today. Just like any relationship, it is good to have healthy examples of what works and learn by examples of what doesn’t. If you begin at an early age where children are just beginning to understand the concept of money, they can mature with a healthy mindset to use as adults.