Disclaimer :: This post is part of an editorial series, “Money Matters.“
Did you learn about handling money the hard way? I did. My parents were great with money, and they were responsible with the ways they handled debt. But like many well-meaning parents, they never sat down and intentionally taught me about finances. We never balanced a checkbook together. We didn’t have one single conversation about debt.
I was responsible with money through high school, but before I knew it, I was out on my own. So, I did all the dumb things college students do. I took out more loan money than I actually needed one semester. Who knows how long it actually took me to pay off that extra money that I likely spent on dinners at Chili’s and new bottles of nail polish. I got a store credit card, and spent $100 on a brand new outfit. This was the 90s, folks. A $100 outfit was living the high life. But, a little education and practice could have gone a long way with me. Because it turns out, I actually love living on a budget. And your kids can, too.
Here are some things you can do to encourage your kids to be responsible spenders and savers.
Model financial responsibility. You can’t teach what you don’t know. Everyone has a different philosophy regarding debt, and there are certainly different levels of okay-ness with it. But your kids should know what yours is and how you work to keep true to your belief system. We are strict no-debt, cash-only (with the exception of bill paying), know-where-every-dollar-is-going-before-we-spend-it budgeters. We will pass that along to our kids. We will show them our family budget, so they will know that we work hard to be responsible with the money God has given us. It took us being married for a little while to realize we needed some help getting on the same page with finances. If you need the same kind of help, I highly recommend finding a Financial Peace University class near you.
Let them earn money. It’s difficult to learn to be good at handling money if you have none. It is also important to learn that in the real world money isn’t just handed out, except for sometimes at birthdays and Christmas. So kids of all ages need to learn the work-money correlation. You work, you get paid. It rarely works any other way. Kids can do bonus household chores (I encourage some non-paid “just because you live here” chores); run lemonade stands; sell toys in local buy, sell, trade groups; earn cash for good grades; walk dogs in the neighborhood. Let them know that time and effort can equal money, if you are willing to work hard!
Help them set financial goals. Saving money is so much more fun when there is an end goal in mind. Younger kids may need visual reminders to help them see how close they are getting to their goals. For small goals, sticker charts are a good way to track saving. For long-term saving, figure out what kinds of accounts your financial institution offers for kids. Older kids will need to set goals, too. Will they be saving for a car? Spring break trips with friends? For college? Older kids may also some assistance reigning in everyday spending to focus on these larger goals.
Create a spend, save, and give plan. Kids who earn a regular income through an allowance or job will benefit from a spending plan or budget. If your child gets a $10 allowance a week, how much of that will be saved? Will any of that be given away to church or charity? How much is available for free spending? Having a plan helps kids know that they can have fun and still reach their short and long-term financial goals.
Teach them to say no to themselves. You can’t buy everything you want. Not as a 10 year old. Not as a 40 year old. So learning to delay gratification is an important skill, especially when managing money. Sometimes we say no to ourselves today so that we can say yes to something bigger and better later. Help your kids keep that bigger and better thing in mind so that the “no” comes a little easier.
Encourage generosity. My parents were excellent models of generosity. They were observant, always on the lookout for ways to bless other people. My dad never hesitated to pull out his wallet and hand over a $20 bill to a person who seemed to be in need. I hope to model that for my kids as well. I pray that they will be kind, unselfish people. I firmly believe that choosing to bless others leads to being blessed yourself.
Are you raising financially savvy kids? What are some things you’ve done to help your kids become good money managers?