While there are some whose parents taught good lessons about money, there are still many of us who wish our parents had spent more time on this topic. When it comes to our own kids, we want to make sure they’re prepared for their financial future. So how do we go about teaching them the financial lessons they need? While the internet provides a bunch of educational videos for kids, this particular topic may require a little more personal touch. Fortunately, there are many ways to discuss finances with your kids without relying on a tablet to hold their attention.
If you don’t want your kids to have to rely on the occasional installment loan when times get hard, use these lesson tips to show them how they can manage their money carefully and effectively.
Since it’s something they’re eventually going to have to tackle on their own one day, it’s probably best to start with expenses: what they are and how big of a role they play in our lives. Sit down with your child and show them some receipts from the grocery store and Target. Let them know that everything you guys have and use every day costs money, and that money has to come from somewhere.
Most parents would rather leave this part out because they feel their kids shouldn’t have to worry about this sort of thing. On the contrary, if you don’t want your kids growing up with a sense of entitlement, then these are the places you need to go with them. Once they understand that there’s a cost behind comfortable living, they may gain a stronger appreciation for you as a provider.
Next, show them that you have a game plan for handling all the expense. If you don’t have one written down already, go ahead and write one up with them watching you so they can see how money is split up to pay for different things. Show them that money can’t just be spent blindly. You have to know where your money needs to go ahead of time so everything gets paid for. You don’t have to show them every tiny detail of your real-life monthly budget, but one that looks like this could help:
This is the fun part. Break out the old piggy bank or collect a few mason jars and label them things your child may want to save up for. Look around the house for loose change you could add to your child’s new savings and count the change as you drop in the coins in. Then, write down how much they have saved and how much more they need to buy the thing they want. This will teach them goals and how they can use money to meet those goals. While you’re at it, show them ways they can earn more money to save. Give them a list of things they can do to earn more like:
Sometimes, the best ways to teach your kids something is to show them how it’s done. Whenever you’re paying bills, buying groceries, going over your budget or making some big purchase decision, it doesn’t hurt to keep them in the loop. They may not be interested at first, but if you keep at it, they’ll come around and start asking questions. Find fun new ways to keep them interested like the saving change idea and they’ll be eager to learn more!