How to start a money talk with your children?
Every parent wants the best for their kids. This does not necessarily mean you want to give them the most up-to-date clothing, toys, and technology. Their well-being is their primary concern, and to help them succeed in life. You want to provide them with a good foundation.
The question now arises whether you are teaching your child the critical lessons that may influence their ability to succeed. All the lessons you teach are essential, but teaching your children about money is vital. It is difficult to achieve any level of success in life without having at least a basic understanding of money. Because money plays such a pivotal role in our lives, having a solid experience of it and being able to manage it are both essential skills effectively.
Here are five suggestions that you can use to help teach your children about money:
Start at an early age
It is said that most habits and attitudes are formed by age seven. So teaching good habits should start before that. Because children learn more through observation, showing them how money works, beginning at a young age, can help them develop an accurate understanding of money. You can take them to the store or pay bills. Even if you use a debit or credit card to make purchases, explain that you are spending your money to pay for the things you buy. You can also teach them by reading them children’s books that focus on teaching children about money.
Allow them to earn money
Children must have access to their own money to learn how to manage their finances. This can be done with an allowance. However, it would help if you thought about making your kids earn their stipend by doing chores. It’s common for people to place more value on the money they earn than the money they receive. You should also make sure that they understand that they will have to do some chores without pay because that is something that they are supposed to do. But if they want to earn money, they will have to do specific tasks.
Teach them the difference between “want” and “need”
It’s a good idea to instill in your children the value of saving money for unanticipated expenses. Have a conversation with your kid about what they would like to do with their allowance, and then assist them in compiling a list that shows what could be considered a need and what could be considered a want. Engage them in family discussions about grocery shopping, significant purchases, or how to adjust the family budget when gas and food prices rise to keep the conversation going.
Help them build a saving habit
Your children’s first experiences with money will probably involve spending, and most of the time, they see you using money to buy things, even things for them. Therefore, it’s crucial to instill in them the value of saving money from an early age. Giving your children a piggy bank or savings jar will help them develop the habit of saving. To help motivate your children, you can use short, simple messages like “saving is a good habit” and “I like to save money; I do it all the time.”
Additionally, you can encourage your children to save more by agreeing to match the amount of money they put aside dollar for dollar or by a certain percentage. When your kids are old enough, you can open a savings account for them. With a bank account, they learn the process of banking and how they work.
Be an example of good financial habits
When teaching your children about money, it’s just as important to show them how you handle money when you’re around them. What if you complain about spending a lot of money on something and then take your kids shopping? You’re sending conflicting messages.
Instead, set an example for your children by acting responsibly with your money. You can teach them the importance of working to earn money and managing the money they receive sensibly. It is not how much money you make that matters, but what you do with that money. Your children will learn good money management habits if you show them how to make wise spending and saving decisions. Simply put, practice what you preach and do it consistently, too.
The most important part of teaching your children about money is to talk to them. Having open discussions with your children about money management is an excellent way for you to teach them. Teaching your children about personal finance can be a time-consuming process. But if you work hard and keep sending clear messages about money, you will teach your kids good habits.
Lyle Solomon has extensive legal experience as well as in-depth knowledge and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, in 1998 and currently works for the Oak View Law Group in California as a Principal Attorney.