You might get surprising responses when you tell your kids you can’t buy a toy they want: “Go to the ATM to get some money,” they may tell you. Kids simply don’t understand the bigger financial issues that inform such decisions, and we often don’t talk to them about finances until they are older. But children can quickly learn about money and its value and the kinds of choices people must make.
Kids learn through observation and repetition. So, the more regularly you talk about money and demonstrate the role it plays in their lives, the better. By turning everyday topics or activities into money lessons, you can take an active role in teaching your kids about finances.
The greatest gifts you can give your children are the roots of responsibility and the wings of independence.
Denis Waitley
Start money conversations early
Even at a very young age, kids can understand the concept of more versus less. You can introduce your kids to money as soon as they can count. Show them money going in, not just out.
If your kids only see you withdrawing money from the ATM, they’re going to think machines hand out money. Make sure they also see you depositing funds.
You can also encourage young children to read price signs at the grocery store or supermarket and explain to them what it means for an item to be on sale. You can explain why you’re shopping at a discount price or why you’re buying certain items in bulk. As they get older, you can even have them calculate the price per unit to figure out which item is the best deal.
Money is Earned (ages 4–12)
No, money does not grow on trees! But kids don’t necessarily grasp that what you or your spouse do all day while you’re away from home (or while you are at your home office) is what empowers you to put food on the table.
Help them understand how your family earns money and let them earn some of their own. Explain to your kids how your business/job brings money. Share how and where you find business opportunities.
Wants Versus Needs (ages 8-12)
No, money does not grow on trees! But kids don’t necessarily grasp that what you or your spouse do all day while you’re away from home (or while you are at your home office) is what empowers you to put food on the table.
A need is more connected to survival. A want is a desire that we can certainly survive without.
Make a list of items that you commonly purchase, everything from bread to new shoes. Have your child rank each on a scale of 1 (just nice to have) to 10 (need to have.) Discuss the rankings without making them wrong. Play “What’s the Worst that Could Happen?” Using that same list or other items you and your child might want to purchase, ask “What’s the worst that could happen if we don’t get this?”
Help them understand how your family earns money and let them earn some of their own. Explain to your kids how your business/job brings money. Share how and where you find business opportunities.
Share your Delayed Gratification list
Make a list of all of your personal “wants” that you are delaying for other priorities. Share the list with your children, and explain your reasoning. Encourage them to make their list.
Teaching kids the concept of delayed gratification can also help in combating the “buy now, pay later” mentality that can lead to credit or debt.
Reinforce the idea that good things come to those who wait.