When I was a child living at home with my parents, we never really talked about money and personal finance topics. In those days the mentality was to keep the financial issues from the children. Thinking back I realized this probably wasn’t the best thing to do, as I had to experience many financial ups and downs because my parents and I never had the “money talk.” You can help your children learn how to manage money and avoid many of the financial mistakes that the majority of us made simply because we were uneducated on the subject.
There really aren’t many good excuses to make to avoid having this talk with your children, grandchildren, nieces, and nephews. Think about the potential costs of avoiding the subject. Do you really want your children and others to go through the same things you experienced? I know I don’t.
How old do they need to be before you begin discussing the topic with them? The best time to start teaching them is when they are young. You can start out simple and begin teaching them about money and the value of saving money. The first topics might include earning, spending, and saving and later on could include giving, borrowing, and other topics once they are a bit older.
#1) Earning – Children should be given tasks around the house they are responsible for without being paid. Everyone in the family needs to have certain tasks that just should be done. When teaching children about earning, try to come up with extra tasks other than their normal tasks so they do not feel like they should get paid for everything they do. You might encourage them to rake leaves for money, walk dogs, mow lawns, babysit, etc. to teach them how to earn. They will gain a sense of financial independence in this way. It will also help them build good work habits.
#2) Spending – Give your child the opportunity to spend a certain amount of the money they make if they choose to spend it. I don’t recommend making children save every cent they make. This can make for an unhappy life. They need to know they can enjoy some of the money. Teach them moderation in spending and let them take part in paying bills. Have them sit down with you when you write out checks or pay bills online. They will eventually understand that money should be managed well. Introduce the topics of wants versus needs and help them establish the difference in the two.
#3) Saving – I remember as a child going to the bank or credit union to make a deposit in my passbook savings account. It was such a big deal to me! I would save my money until I had enough to make a deposit. Then my parents would take me to bank and credit union to make my deposit. I enjoyed walking up to the teller’s counter and giving them my money and my passbook. The teller would write in the amount of my deposit and stamp the date in my passbook. I wanted to fill up an entire page with my deposits and watch my little savings account grow. It was really a big deal when they wrote down the interest I had earned! To me, seeing the numbers grow was a big incentive to continue saving. Another reward for making a deposit was a piece of candy the teller would give me. It may not seem like a big deal but it was to me at the time.
These are just a few recommendations for teaching your children about money management. There are many more ideas out there so find the ones that work best for your situation. Search for additional techniques you can incorporate when tackling the topic of money management with your children. Make it a fun experience for everyone!