Helping kids learn about money was a topic that came up often when I was a budget coach. Once families were able to stabilize their finances they often began how to help their kids learn about money so they could avoid the mistakes made by their parents.
Hare are five ways you help your kids learn about money.
5 Ways to Let Your Kids Learn About Money
Yes, I said let them not teach them. Sometimes we teach by guiding, correcting, and giving instruction but other times we must passively let learning happen without making a formal “learning session” out of it.
Let Them Play
Early on, you can help kids learn about money by playing “store”. Younger children will begin to learn the concept of cash flow, supply and demand, and even budgeting. From an early age, they can have “money” and you can set up a shop where they can buy stuff.
Our son loved to gather up things around the house: shoes, toys, stuffies, even the dog and set up a store where he could buy things. Sometimes with money, sometimes with kisses.
Let Them Watch
The family budget is just that – the family's. Children should not be kept in the dark about money matters just because they are children. Let your children hear you discuss the budget. Explain to them that you cannot buy ABC because extra money is being saved for XYZ.
Share with them when the family has reached a financial goal even if they don't fully understand the value of it.
Please hear me – this does not mean we put our money troubles, stresses, and worries on them. Children should free of money worries and problems but they should understand that the family earns, gives, saves and spends.
Let Them Earn
While I'm not an allowance advocate, I do believe children need to earn money so they can have real money life lessons. We shouldn't pay our kids for making their beds or brushing their teeth, but we should have a system that allows for cash to be earned around the home.
Letting your children earn money teaches them the biblical principle that a workman is worthy of his hire.
This is also an opportunity to teach them humility, and gratefulness. Our son was surprised when his great uncle gave him $5 last summer for helping with a remodeling project. We were able to discuss how his hard work blessed his uncle and earned him some unexpected cash to be thankful for. Later, when he asked how else he could earn money from the same uncle I was able to speak with him about being humble in his earnings.
Let Them Spend
We have a tendency to want our son to save his money. For me, this is partly because I know what he wants to buy is junk and the other part is that he is just starting to understand the actual value of the money he has.
But our children will never learn that money comes and money goes if they don't spend it. Letting them make choices helps them gain independence. We can guide them, help them think through purchases, and make them save and tithe we must also let them spend.
Let Them Fail
As hard as it sounds, we must allow our children to make small failures so they can learn through experience. When we let them spend we will also need to let them fail.
A few months back our son had several dollars to spend and while at the “everything-is-a-dollar store” he found a toy motorcycle that he just had to buy. He had four and wanted to spend one (I handled the tax…he's not ready to figure that out yet). So he got it. It was broken in two days.
Now, when he has money burning a hole in his pocket, he remembers the “cheap junk” as he calls it and will wait until he has enough for a better item. So far, the urge to spend has passed and he has been saving up his spending money for something nicer.
If you want to help your kids learn about money, resist the urge to rescue them at every turn.