This is the first part of our “How to teach kids about money” series.
Kids start their lives thinking things like food, toys, and money just appear whenever you want them. They have no idea where money comes from and in this age of credit cards and online shopping, they rarely see real cash.
As soon as kids are old enough to think about spending money, they’re old enough to start learning its value.
Before a child learns what a dime or dollar is they should learn more basic concepts like earning, saving, and spending. So when you’re trying to teach your kid these concepts about money here are two things you can do to help.
Talk About Money & How You Use it
Money is intertwined with almost everything we do so there’s no shortage of opportunities to talk to your kids about money.
You can break down conversations with your kids into three parts: saving, spending, and managing. Encourage your kids to do all three by sharing your experiences and how you’re using money now.
When talking about earning, emphasize that money is earned, not made. Money isn’t given or created, you have to work for it.
When talking about saving assure them that when you can’t afford something it’s not because you’re out of money. Talk about the priorities that come first like your home and food and that sometimes you have to wait to afford big things.
You won’t need to teach kids to spend money but you can teach them to limit their spending by talking about how to decide between two things if you can only have one.
Some questions you can use to get money conversations started are:
• Why should you earn money?
• Where do you think money comes from?
• How would you like to earn money? • Why should you save money?
• What’s something you want that you don’t have enough money for yet?
• What happens when you run out of money?
• Why should you spend money?
It’s important that when you talk to your kids about money you don’t project your own worries and fears into it.
A study from Halifax showed that one in three children worry about money and three-quarters of those children are aware their parents have money worries.
Foster healthy views of money in your children by reassuring them that you are earning money, that you’re paying all the bills, and that just because you can’t afford something now doesn’t mean you’ll never be able to afford it.
Improve Your Own Financial Literacy
You don’t have to have a degree in finance to talk to your kids about money. But making an effort to learn more about personal finance will help you better be able to break down topics in a way your kids will understand.
So if you’re ready to start teaching your kids about the true value of money be open to learning and talking with them about all aspects of it. You’ll set them, and yourself, up for a lifetime of success with it.
Find out more ways to teach kids about money in the 2nd installment of our “How to teach kids about money” series: Saving Money.
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