As a child, money really doesn’t hold the same value as it does in our adulthood. Children only think about money and finances in general when it relates to something they want or think they need – often tangible items like clothes, shoes, or that shiny new toy.
Maybe we had the same ideals during our adolescence until life showed us differently. No matter how we were raised or how finances specifically were (or were not) talked about, it’s important we leverage what we know now and create an environment where the entire family can benefit – no matter the age.
Have open and honest conversations
In many households, the topic of money was completely off-limits to children and categorized as an “adult” conversation. While we all understand that kids should in fact – be kids, that doesn’t necessarily mean we should withhold them from these conversations.
Finances can be tailored for all age groups and frankly, you would be surprised how quickly they’re able to pick up information. For example, if there are mistakes you’d like to prevent your child from making (or at least generate awareness), use real-life experiences to help paint the picture for them.
What are some patterns or behaviors you fell into in your younger years? What would you tell your younger self if you had the ability to? Use these questions to generate a list of things to talk about as the situation allows. They may not be able to grasp things fully, but they will have the background knowledge you provided to help generate better decision-making skills as it relates to finances.
Every moment is teachable
Since children don’t have the responsibility of paying bills, they’re typically oblivious to the consequences (good or bad) of things. If your little ones have a hard time remembering to turn off lights when they’re not in use or turn the water off when brushing their teeth – bring it to their attention. Explain to them that utility bills are not free and every little bit helps. While it’s not about being a drill sergeant and patrolling their every move, it’s certainly about creating children that are aware and mindful.
If you all are in the grocery store and they want to pick every single cereal in the aisle, you can easily explain why it’s important to select a couple of boxes versus ten. As much as growing children eat, they don’t need ten different boxes of sugary cereal. This is the opportunity to go into depth about food being readily available when the boxes selected run low. Also, food in fact does go bad if not eaten in a time period which creates more waste – on top of wasting money!
Discuss the importance of saving early and often
From the piggy bank days, we understand why it’s so important to save. Emergencies happen, unexpected occurrences are a part of life, and having multiple nest eggs to fall back on creates a sense of financial peace. Open a savings account for each child and talk about why it’s important to save.
Many banks have checking and savings accounts tailored for minors. If they receive an allowance, have a hobby that generates some income. If they are old enough to seek employment, make sure you all are discussing their own personal finance goals weekly.
Keeping this at the forefront of their minds may be annoying to them, but children require positive reinforcement. Repetition is key and they will thank you later for all of the valuable information you provided. Saving doesn’t have to be painted as this laborious, boring topic. Understand, children will make mistakes – but didn’t we all?!
Create an environment that helps them build a money mindset
The power of analysis and critical thinking are some of the most influential skills to have and put to good use. Creating a safe space for your children to ask questions, make good choices, make not-so-good ones and learn from them is the most fulfilling thing we can do as adults to help mold their impressionable and sharp minds. How many of us were reactive versus proactive about money? No matter where you fell or fall today on the spectrum – we can use everyday happenings to help them understand the future is just as important as the present.
Let’s say your child wants to buy something. The first step would be to ask them questions like, “How much is this item? Why do you want this item? What can this item do for you? Do you want to save up so you can purchase it?” Allow them to think these answers through; this helps them process the value of obtaining the product. Next is the saving process. This physically helps them show the “waiting period” – the time you identify an item and the actual time period it takes to acquire the funds to purchase. Sometimes, during this process, they may identify something else they’d like or completely scrap the product altogether. During this waiting period, you can also ask questions like – “Will you have money left over after this item is bought? Has anything changed about what you’d like to buy?” These critical skills are important and will help shape their ability to be sure in their decisions or pivot. Finally, the thing they’ve been waiting for – buying time! This is the gratification period where they’re able to see their ability to save and the outcome of their hard work.
Be the change you wish to see
All of the examples previously mentioned not only help our children, but they help us too. Removing finances from the taboo list now creates a new audience – our kids. They become our overseers, to help challenge us on our own financial decisions. This is a win-win for everyone involved. When it comes to family outings, vacations, or any planned functions – incorporate the children in these exercises. Money can indeed be a family affair and a constant teaching lesson for everyone!
Marsha Barnes is a finance guru with over 20 years of experience dedicates her efforts to empower women worldwide to become financially thriving. Financial competency and literacy are a passion of Marsha’s, providing practical information for clients increasing their overall confidence in their personal finances.