How to Talk With Your Kids About Money Issues

teaching kids about money

I can remember asking my parents to just write a check to pay for something that was ‘too expensive.’ When you’re a kid, money is something that just appears in your dad’s wallet and checks are used to buy things that you don’t have money for!

It wasn’t until I started saving my own money that I realized that you couldn’t just write a check or swipe a card to buy everything you wanted.

The scary thing is that a simple concept like this hasn’t caught on for the millions of people in America who carry an average of $15,956 according to a CreditCards.com report.

So how do you even begin to teach your kids about money?

The truth is, if you have kids, you’re already teaching them about money whether you know it or not. They’re watching you at the store as you look for deals and while you’re paying at the cash register. Your kids are listening to you and your spouse talk about bills and your monthly budget.

Even if you try to keep money issues out of the range of your kids’ ears, they’re still absorbing a lot of your habits when it comes to money.

There’s no secret formula for teaching your kids about money, but there are ways to shape their minds when it comes to good financial management. Whether your kids are 5 or 15, it’s never too late to emphasize these money lessons as a parent.

1. Teach good stewardship by example.

How many times have you encouraged your kids to save a little bit of everything they make? It’s just a good practice to set aside 5-10% for a rainy day, right?

So how’s your rainy day fund coming along?

I know you have bills and credit card debt and medical expenses and car insurance payments and Christmas presents to buy and this and that. But if you fail to save, you’re showing your children that it’s okay to spend everything you make. Living paycheck to paycheck isn’t something you want for your kids, so show them that you’re making it a priority to pay yourself first even when the budget is tight.

2. Involve kids with money decisions.

Thinking about making a big purchase like a TV, car, or new house? It’s the perfect time to bring the kids into the discussion by asking their opinion. Your kids are smarter than you think when it comes to math – most fourth graders can work long division problems better than adults!

Don’t be afraid to give them real numbers to crunch and ask them what they would decide if they were spending their own money.

3. Let kids manage their money.

Whether you give your child an allowance or not, it’s likely that they’ll have their own money to manage from time to time. Help them succeed by setting up a bank account for them and by teaching them to keep close records of their spending.

You’re shaping your child’s financial future with every lesson you teach them about money. Learn to talk to your kids about the simple things when they’re younger, and you’ll have the confidence to talk about issues like life insurance and long-term care options when they’re older.

In your opinion, at what age is the best time to start talking with your kids about money? Leave a comment!
















Comments

5 Comments
  1. I think that, of course kids should be involved in the decision making process.

    I also think that great care must be taken so that they understand. In a world where their food, rent, clothes, etc. are taken care of, $20 might as well be a million to them…

    I don’t know the answer

  2. Best age to start talking to kids about money? Probably the first time they ask for something that costs money, lol… or maybe the first time they ever mention wanting to buy something with their “own” money. I remember when I was little, my mom’s parents were the only ones who taught me about money, how to spend it wisely, be frugal, and save. They taught me at a very young age. I think they opened my first savings account for me when I was 9 years old. I still have that exact same savings account lol :)

    Kids often want to immediately spend the money they get (however they get it). They’re only human and there are definitely things they have their eyes on, lol! But I think it’s important to explain other options they could do with their money later were they to decide to not spend all their money right that minute.

    I also think it’s good to have children work for the money they receive, rather than just receiving an allowance for just being alive. It’s not teaching them anything if they get something for nothing. That’s not how the real world works.

    And credit cards are not magical money that get you stuff when you don’t have the money. If you use a credit card knowing that you don’t or won’t have the money to pay it off, it’s basically a form of stealing as far as I’m concerned.

  3. we have recently started implementing a few different strategies with our kids around finances. Fristly – we now work with them on a monthly budget for their pocket money (they receive their pocket money monthly, for doing various chores around the house). Secondly – when we take them out for a meal, we give them a ‘per person’ budget for their food and drink. we don’t specify what they can order, we allow them to choose whatever they like, but they have to work the budget for themselves. This has resulted in one of them ‘quitting’ on maths at one meal, and choosing to eat nothing, because she thought it too hard to work out… on another ocassion they pooled their money together and shared a couple of dishes between them so they could have dessert as well as a main meal… I think it has really started to teach them the value of working within a budget and making the budget work for them in the best way they think it can.

  4. Chrissy McGlory

    I think it truely depends on the maturity of the child. Afetr having said that I would say as soon as they are sstarting to earn some type of allowance or compensation for work/chores done.

  5. Gertrude Angom

    I would love to receive your daily posts