We’ve all heard it a million times: Money makes the world go round!
Woman This Month’s Parenting Columnist Ouiam El Hassani tells us how we can teach our kids about money.
Teaching your kids about money early in life can help them to learn healthy financial habits that will last a lifetime. The more they know, the better they’ll be at making monetary decisions, whether it’s buying a toy they want or saving for college. But let’s face it – it can be a tough concept to explain.
Teaching Young Children
Kids are very adept at picking up both verbal and nonverbal cues about how their parents are handling finances at home so it’s important to keep that in mind as you bring up the subject.
Be mindful of discussing money out loud:
If you spend time worrying about money or bickering with your partner about upcoming bills at home, kids are able to pick up on the stress you’re feeling. For many children, their attitudes towards money, later in life, are mostly formed by the time they’re seven-years-old.
That means that your little ones are not only learning how you interact with money but are forging behaviours they’ll likely continue for years to come. While it’s okay to discuss money around your children, try to pass down positive attitudes you’d like them to adopt, not ones you’d like them to avoid.
Never too early to teach savings; saving as an adult usually looks like a separate bank account you transfer money to each month. For kids, money is a lot more visual. The best way to help them understand the concept of saving is to use a jar that lives in a visible place, so they can watch money being put away and spent at a later date. If they get an allowance or a gift, show them how to put savings away first.
Preteens
Many parents start giving allowances to their children as they start middle school. Instead of giving your kids an allowance just as a weekly or monthly spending stipend, consider using it as a way for kids to earn it as a reward in exchange for doing chores. An allowance can be a flexible amount that increases as kids take on more chores. Teaching the value of money is an age-old concept, but it never stops being relevant.
Another essential step is teaching your kids how to understand needs vs. wants. For many preteens, this is the first time they start to recognise that others may have more than they do. This is the perfect age to start explaining the difference between wants and needs.
When you’re in the store and your children are asking for a new video game or a piece of clothing, instead of just tossing it into the cart, talk to them about whether it’s something that’s really important to them or if it’s an impulsive financial purchase. Understanding the difference between wants and needs can help kids make sound financial choices later in life.
Teens
High school years are the final step before your kids make it out into the world on their own. Their financial fundamentals are well underway and it’s time to help them start learning how to make and use their own money.
Encourage your kids to take up summer jobs. Teenage years are a great time for kids to start finding a summer job or internships, to supplement their allowance or gifts that they get throughout the year. There are many opportunities for older kids to make an income online or by getting entrepreneurial on their own.
No matter how old your children are, it’s important to show them that a strong understanding and relationship to their personal finances can help them succeed later in life. This starts with passing on positive behaviors for them to follow at a young age and then having financial conversations with them as they get older.
Learning about money is an ongoing pursuit and there are lessons to be learned at every step of the way.
