Five Money Lessons Every Parent Can Teach
As parents, we strive to give our children the best start in life, and that includes teaching them about money. This might seem like just another task on your to-do list, but the truth is, life offers teachable moments with money lessons almost every day. So, bring your kids along for the ride and include them in the conversation. Here are five tips to help your kiddos learn about money:
1. Start early with basic money concepts
At the core, financial literacy comes down to understanding needs versus wants. I remember when my kids were little, they’d ask for candy or toys in the grocery store checkout line. When this happened, I’d explain that we came into the store with a list of items we needed, and anything extra was a want. And yes, I’d also utter the adage that “money doesn’t grow on trees,” to reinforce the importance of prioritizing spending. Teaching kids the difference between needs and wants in the moment helps them learn how to make thoughtful financial decisions.
2. Teach the value of working and earning money
I used a chore chart to help my kids earn money for tasks around the house. The chores evolved as they got older, but it was a great way to teach them to have some skin in the game. They worked to earn money, which gave them a sense of responsibility and pride. It was a win-win because I got extra help around the house, and they learned the value of earning money. As they got older and took on neighborhood jobs like babysitting and yard work, the growth really blossomed…and so did their piggy banks.
3. Introduce the Three S’s
When kids start earning money, they’ll want to spend, making it the perfect time to introduce budgeting. Teach them the three S’s: Save, Spend and Share. Saving builds patience and goals setting, while also helping them avoid impulsive, debt-driven buys. Often, by the time they’ve saved enough for something, they may no longer want it – giving them a chance to redirect those funds toward a new goal. Sharing encourages generosity and empathy by helping others, while spending allows them to enjoy the reward of their hard work.
4. Lead by example
None of us are perfect with money but being open -even about mistakes -can be a powerful teaching moment. It’s also important to align with your spouse to model good financial habits. Our resources can help start that conversation with your spouse and develop a plan.
We all face financial challenges. Talking to your kids about them (in an age-appropriate way) helps reduce anxiety around money and build resilience. For example, if you need to cut back on expenses, you can explain in positive way, “We’re saving for something special, so we’re making smart tradeoffs to cut back on other areas.” This shows your children that you’re in control of your finances – not the other way around.
5. Encourage financial independence
As your child grows, give them opportunities to manage their own money. This could mean opening a bank account and letting them budget for expenses such as a cell phone or outings with friends. This autonomy will build their confidence and strengthens their money skills.
You can also introduce the concept of investing for long-term financial independence. Our video on how time builds wealth can help teenagers see the power of starting early.
By taking these steps, you’re on your way to raising financially strong kids who are prepared to make smart money moves. Investing your time on this important topic now will pay off in the long run – literally!
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