Of all the lessons we can teach our children, money management skills are among the most valuable. Few things affect more parts of a person’s life than their relationship to money. And money endures; what you teach your children about money is likely to not only affect them, but their children as well.
But so often money talk is shielded from kids, considered too grown up for them, something they “shouldn’t have to worry about.” While these sentiments come from a place of caring and longing to protect, the fact is that children need to become financially savvy as early as possible, to develop habits in youth that will serve them throughout their lives. According to Forbes, by the tender age of seven, a child’s money habits are already in place. It would be hard to find any parenting duty more important than helping your young children build the skills for a healthy financial life.
But where to begin? One idea is to discuss why mom and dad go to work in the first place, and proceed from there. The resources below may serve as your entry point for beginning a lifelong conversation with the kids in your life (whether you are an aunt, grandmother, or parent).
Become Their Money Mentor
And don’t worry, to do this you don’t have to be financially savvy yourself. It’s said that we teach what we most want to learn—and by embracing your role as your child’s money teacher, you can bet you’ll learn a lot in the process. Make it a family affair and enroll the whole family; find ways to make it fun for everyone. Planning for vacations, creating clear household budgets, and even simple trips to the store can be turned into valuable money management lessons.
Teach Math—not Money
Studies show that developing proficiency in math leads to better credit management, lowers the risk of foreclosures, and improves negotiating skills. Financial literacy begins as soon as children begin wanting things of their own, like toys, games, clothes, and special treats to eat. By focusing on math instead of money, children may learn how to make better spending and investment decisions well into their later years.
Let Kids Make Their own Purchasing Decisions
We learn best by making mistakes. On the coupon website Offers.com, company CEO Steve Schaffer shares his unique “Schaffer Allowance Method” created to help his kids become more savvy consumers. It’s simple but sophisticated. Each child receives the same base amount plus an additional fifty cents per year old they are. Deductions are taken for savings, donations, and a “family tax” to help the child understand how the real world works, fostering generosity, accountability, and money mastery. With what’s left over they are free to decide how their remaining allowance is spent. Schaffer claims this approach saves his family money in the long run because his kids learn the value of a dollar at an early age. It also avoids conflict as they get older since they develop their own values around finances.
Ask Other Parents
Money shouldn’t be a taboo subject. Discovering how other families manage financial training is a great way to uncover new ideas. Even the world’s most famous billionaire, Warren Buffett, has personal money regrets and he loves to share stories about what he wished he’d done differently with his own kids. He launched his popular Secret Millionaires Club so he could share money advice with young people.
It’s never too late to start your child’s money education. Using this age-by-age guide, you can design fun ways to bring engaging money concepts to their daily routine. Even a small step forward can make big difference in a child’s life. Here are some excellent resources to help you make immediate changes in your home life and ensure your kids have a more profitable future.