How to Teach Your Family About Money Management
If you reached adulthood without knowing how to balance a checkbook, you should have a vested interest in making sure your kids’ financial literacy is stronger! Even if you have always felt financially savvy, that same knowledge doesn’t get passed down without some effort.
Helping children understand money can start from a very young age. If you hope to give your kids a leg-up with wise money management, it’s never too early to start. April is Financial Literacy Month, so let’s learn some practical tips for teaching your kids about money management!
When Should I Teach My Children About Money?
As soon as your children are old enough to vocalize their wants, assist with even the most minor of chores, or comprehend that things have value, you can begin to teach them about money. Of course, that doesn’t mean you’ll sit down with your toddler to review the monthly bills! Instead, you start with the basics.
If you have a 4-year-old who is begging for that “hottest new toy” or pleads for a special treat, you have a great opportunity to explain the building blocks of money. You can show children what earning is by placing a value on small tasks. If you put your toys away today, you can earn a dollar. Some parents prefer not to put a monetary value on chores, and instead give their kids a weekly allowance that’s age-appropriate.
Whether you go with an allowance or let kids earn money by helping around the house, their funds can be given cash or tracked in a ledger book.
It’s a simple lesson to start with - “the things you want may have to wait” - yet is a smart beginning to a long-lasting, positive relationship with finances.
How Should I Start Teaching My Kids About Money?
Explaining in age-appropriate ways what money is and how it works makes for a solid start. Educating our children about how the world works is a job we have as a parent, and money is a big part of how the world works.
Money lessons can include:
Creating a chore chart with values assigned to each accomplishment
Posting an earnings and savings board to show children how far they’ve come with saving their allowance
Discussing a goal or purchase the kids want, and giving your kids a photo of what they’re working towards
By working out a plan together, you can explain to children how they can work hard to save for goals. Much like you go to your job each day, divide your earnings to both cover your expenses and save for the long haul, and decide what you and your family value most, you can teach your children the same skills on a smaller scale.
These basic building blocks can go a long way to providing much-needed groundwork needed to establish a healthy relationship with finances. Continue to build your work, as your children continue to grow. As they master one level of understanding, begin to advance the concept.
For example, your 4-year-old may understand that, if I clean up my toys three days in a row, I get a cupcake. But your 10-year-old is likely old enough to understand longer-range planning. If I sweep the floor every day this week, I can get a $10 Roblox card. But, if I do it every day for a month, I get a $50 gift card.
Create an Open Line of Communication About Money
Whatever their age, another crucial aspect to educating your family about money is to keep an open line of communication. Allow children to ask questions. Try to be open and honest in your responses.
You could start a monthly or weekly family meeting to talk about finances. Let your kids see how much your bills are, and give them a vested interest by talking about the next vacation you’re planning. As they get older, discuss concepts like credit cards (the good and the bad), loans, and retirement accounts.
When finances are a normal part of family conversations, they are less taboo and mysterious. Remember, if you aren’t teaching your kids about money directly, they’re gleaning (probably incorrect) information from elsewhere! Here’s another blog to help you get ideas for teaching kids about money, and you can always reach out to our office for advice.
