Good financial habits often start at home. As a parent, it’s imperative to teach your kids about money as soon as they can say their ABCs. Teaching money management isn’t a “one-and-done” lesson, either. As your children grow older, you should continuously instill positive financial habits into their everyday lives. Our innovative tools, such as our debt paydown techniques and debt analyzer, can help you become an excellent role model while you improve your financial situation and strive for financial freedom.
Are you ready to help your children build the foundation for financial success? Here are eight ways to teach your kids about money:
1. Allow Your Kids to Work for Money
Allowance is an excellent way for your child to start learning the fundamentals of saving and spending. However, as we adults know, money doesn’t grow on trees; we must work for it. Thus, it’s not often a smart strategy to give your kids an automatic weekly allowance with no strings attached. By encouraging your kids to help out around the house and get good grades, you promote a positive work ethic. Many parents give their kids money in exchange for completing household chores and receiving good grades in school. If your kids are old enough, you should let them get a part-time job that they can balance with school work. Children that can’t legally work for companies may be able to babysit, help neighbors with yardwork, or set up a good old-fashioned lemonade stand. Ultimately, giving your kids money without them doing anything in exchange isn’t how the real-world works.
2. Be a Good Example
There’s no doubt that parents are strong remodels for their kids. If you don’t have good financial habits, your children could follow suit, especially if they’re aware. For example, if you bring your children on impulse shopping trips, you could encourage overspending. And although you might not see your impact in your child’s early years, it will become more evident as they become a teenager and have more freedom and money. So, don’t only teach your children how to manage money effectively – set a good example. And even if you’re struggling with financial issues, such as a lot of debt, don’t involve your children.
3. Ditch the Piggy Bank for a Mason Jar
Piggy banks are cute, but they aren’t as effective when it comes to saving money. Mason jars are an excellent alternative because they enable your kids to visualize how much money they’re saving. As your kids see the jar fill, they’ll become increasingly motivated to save more money. Not only that, but it’s easier for your children to pull money out of a mason jar and learn how to count coins. Your teenagers might think they’re too old for a piggy bank, but fortunately, mason jars are great for all ages!
4. Teach the Concept of Opportunity Cost
Most primary and secondary schools teach the concept of opportunity cost, but kids learn best when they’re put to the test. We constantly experience opportunity costs throughout adulthood, so your little ones must understand that money is a limited resource. We all experienced moments in our childhood when we had two decide between two toys but only had a limited amount of money. Ensure that your children know that they must forgo the alternative if they use all their money for one item. And even if you feel empathetic as a parent, don’t cave in and purchase the other item.
5. Help Them Understand Impulse Buying
As mentioned, kids often mimic their parent’s actions. Therefore, if you make an impulse purchase when your kids are around, they’ll likely follow in your footsteps. Almost all kids spot something at the grocery store they want and get frustrated when they don’t get their way. For example, your little one might see a brand-new flavor of Oreo cookies. You tell them, “we already have another package at home!” Your kid replies, “I want this new flavor!” If you cave in, your children will slowly learn that impulse buying is acceptable behavior.
6. Open a Savings and Checking Account for Your Kids
Many financial institutions allow teenagers to open savings and checking accounts with the help of their parents. Opening a banking account enables your teen to say “goodbye” to their mason jar or piggy bank and gives them additional adult-like responsibility. It’s also great for your teenager to have a banking account if they start working and want to receive a direct deposit. Not only that, but it exposes them to online banking and helps them understand the importance of overdraft fees, monitoring account balances, and setting savings goals. Fortunately, as the parent, you’ll have visibility into your teenager’s account to ensure that they’re spending responsibly.
7. Teach Them the Importance of Giving
As the saying by Anne Frank goes, “no one has ever become poor by giving.” Charitable giving is a vital part of many Americans’ budgets, as individuals feel the urge to give back to their communities and organizations they care about. In fact, Americans donated $471.44 billion in 2020 alone. Your children don’t have to donate anything significant (a few dollars here and there can make a difference). However, teaching your children the importance of donating helps cultivate humility and teaches them that earning and saving money isn’t just about spending the cash on themselves.
8. Set Savings Goals
Whether it’s a trip to Disney World or a new video game, children should always have a long-term savings goal. The ability to save and avoid impulse buying helps set them up for success during adulthood. Furthermore, setting savings goals also makes children think outside the box and develop unique ideas to increase their income. Once your child opens a bank account, you can introduce them to our powerful tools, such as our money organizer and various Mint alternatives. Even though your child doesn’t have debt yet, they can begin to explore our debt collection management software and debt analyzer.