Teaching Our Kids About Money
January 23, 2022
During my childhood, I rarely heard my parents discuss money. All I knew was we needed money to buy things. When my mom and I would go to stores I would see her pay for the items in her cart at the register. I also was aware that my mom was intentional about the things she purchased based on what she bought and where she shopped. From watching her, and seeing our circumstances, I came to the realization, we were broke. As a result, I did not ask for much, if anything at all. Knowing that my mother did not have the means, I did not want to add any additional burden. As my mom always say, “little is much when God is in it.”
This is something that we should be mindful of as parents. We might think we are sparing or shielding our children, but the reality is, they already know. It's best to have an open conversation with them at their level so that they can be part of the discussion and be a part of the decision making within reason. You might be surprised at how well they can grasp and handle the situation, and at the very least, you are not leaving them in the dark to draw their own conclusion, which might be completely incorrect.
As parents, we want the best for our children. We want to make sure they have the tools they need to succeed in life. This is why we teach our children manners, how to communicate and interact with others, the importance of eating healthy and why education is important. However, the one life lesson we tend to neglect most often is the lesson of money management. Money management should be one of the most important life lessons we teach our children.
Where to start?
Start with the basics. One of the most popular gifts at baby showers, outside of diapers and cute clothes, are piggy banks. Although the piggy bank is a cute decoration for the new baby’s room, that is not its only purpose. It is the first tool to start teaching your little one about money.
With my little one whenever I received change from a transaction, I would bring the money home and we would put it in the piggy bank together. This provides a visual and the understanding that coins go in a piggy bank even though he did not know what money was at the time. At 12 months, I began to put the money on the ground with the piggy bank and having him put the coins in it with him.
This process obviously took time, at this age children are just learning to pick things up, but it is a good way to teach and reinforce good money habits, such as saving. As he grew older, I changed the word from piggy bank to savings. I began saying things like “you must always put money into savings” or “saving is so much fun” to reinforce the importance of saving. I also upgraded his piggy bank to a clear jar so he can see his money growing, and we made a big deal about how full his jar was getting, which made him super excited.
However, no matter how old your child is, teaching them the importance of saving is important. If you have older children, a good way to do this is to give them a saving jar and a goal to save for - whether it's for a toy, clothes, or a car. They will learn discipline, delay gratification, goal setting, and planning. Savings is an essential money habit that lays the foundation for future financial success.
One of my proudest moments came when my almost three-year-old son was in church and one of the mothers of the church handed him some coins in his hand that were too much for his little hands and he looked at her with the brightest smile and pure excitement and said, “thank you”. She then asked him “what are you going to do with it?” and he said, “put in my piggy bank.” She was so surprised and impressed that was his first thought, from that Sunday on whenever she sees him, she puts coins in his hands for his piggy bank.
Money is earned
We must teach our children about working to earn money. At the age of five we introduced the Save, Give, and Spend jars. Up to this point any money that he received he saved it. Which is wonderful but money is also to be enjoyed, as well. For doing his chores such as picking up his toys and making his bed, he was paid a commission.
He got paid once a week with cash, based on the work he did (No work, no pay). That is why I call is a commission. Using cash is very important because it is real, they can feel and touch it. It ignites the senses. I feel that transferring the money into a bank account where they will never interact with the money diminishes its value. Next, we sit down, and he decides the amount he wants to put in each jar. I explain each time the purpose of each jar and we always start with the savings jar. We also keep track of the money he deposits and withdraws from each jar.
With the spend money he was able to buy what he wants without judgement. After going into a store my son saw a toy that he wanted. We looked at the price and I asked him do you think you have enough in your Spend jar to cover the cost? He was not sure. So, we went home to count the money he had, and he did not have the full amount. I used this opportunity to talk to him about the amount of time it will take to save up to buy the toy and if there was a way to make the money faster, like doing extra jobs around the house. In the end he was able to buy his toy and pay the cashier himself with his own money. He was so proud and not only that I realize that he took extra care of that particular toy, which was a pleasant, unexpected outcome for me.
For older children, teach them how to budget. Explain the danger of debt. Let them get a job and teach them how to manage their own bank account.
I truly believe that having your child pay for things they want from the money they earn will have a tremendous impact on the way they view and understand money. They see the money they save decrease, and they get the joy of buying something for themselves. However, once they use up their money that is it. They must work to rebuild their account. If they come to you asking for money after they spend all their money the answer is no and once again this is another opportunity to have a conversation.
Lecturing does not work. Have a conversation with your child and lead by example. If they see you as the parent, planning, budgeting, and using cash, they will do the same. Keep it simple. Educating your children to make smart saving and spending choices takes time and it will not always be easy, but you must be consistent. Even now as an adult my mom still reminds me to save.
It is a conversation that never ends, so do not feel you have to jam pack it all in a weekend before they go off to college or as they are spending their money on another toy they do not need. The most important thing is that you teach and exemplify healthy money habits with your child, because they will learn it one way or another. So, make sure you are playing a key role in the way your child sees, thinks, and interacts with money. Giving your child the gift of financial literacy will benefit them all areas of their life for the rest of their life.
How do you teach your kids about money? let me know. leave a comment I would love to hear from you.
-The Irie Life -
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