Teaching kids about money management

Here are a few ways to get kids into the right money mindset.

We teach our kids how to take care of their bodies, how to read and write, and how to be part of a team, but what about good money habits? Many adults struggle with money management because they were never taught how money works and how to manage it as children. So, here are some tips on how to get your kids in the right mindset when it comes to money:

Start the basics early.

It may seem like overkill, but even toddlers can understand the basics around how money works. When your child asks for a piece of candy at the grocery store, explain to them that you came to the store to get bananas, juice, and bread – not candy. Tell your child that you had a plan (or budget) and that you need to stick with it! Even small examples like this can show your child the importance of sticking to a budget and not making impulsive purchases.

Talk about saving.

Next time your child wants a new (expensive) toy, explain that you’ll need to save to get it (even if you’re not making them pay for it themselves with their own allowance). Let’s say your child wants a new bike that costs $50. Just explain that you’ll need to save $10 a week to be able to buy it. It’s possible that by the time you have the $50 saved, your child may find a bike they like better or decide they’d rather use the money for a book on different types of bikes instead. 

This practice can demonstrate the importance of saving for bigger purchases, how delayed gratification can sometimes help you make a better decision, and again to stay away from impulse buying. 

Encourage earning money or items.

Another great way to instill an appreciation for money is encouraging your child to earn extra money or items they want. If your child wants an iPad, something that is definitely a privilege (an expensive one at that), explain that if they want something that nice, they’ll have to work for it. While you can take this literally, as in helping them save for it, a better option for something that is more expensive may be to have them earn it.

Make a deal with your child that if they help with yard work over the summer, you’ll purchase them an iPad at the end of the season. When going this route, it’s important you don’t hold it over their head as a threat. If your child is complaining and not wanting to contribute, don’t say “If you don’t mow the lawn right now, you’re not getting that iPad.” Try instead, “I understand you’re tired today, let’s take a day or two off and we’ll come back to it. Remember, you’re working toward a goal and it’s okay to take a break but don’t abandon your hard work!”

This helps keep your child positive about the idea of earning certain privileges and makes them excited to continue after a break – which is a realistic situation that they’ll come across again in their life. Adults and children alike experience burnout. Normalize it and emphasize the bigger goal. 

Your child is just that – a child. Allow them to make mistakes and not understand topics fully without the fear of reprimand or repercussions. You want to instill an attitude of positivity when it comes to money. Show them that if they work hard and stay on course, they can accomplish a lot! Allowing them to grow into confident and money-conscious adults.