Being able to teach your kids to manage money is an important life skill for them. But all too often we treat money as a taboo subject.
To me, it’s less about how much pocket money we give and more about the lessons we try to teach.
Here’s the top 6 lessons I want to teach my kids about managing money.
1. Money is important
Money matters. Your kid’s ability to manage money well will have a huge impact on their choices in life. So talking about money is important. Be matter of fact and keep things simple. Even the youngest child can understand that parents work to make money so that your family can have basic needs like food and a home. And that these needs are different to wants, such as holidays and treats.
2. But money does not the man (or woman) make
While I want my kids to understand the importance of money, I also want them to know that it is just a tool. A great tool that means you can have and do things that are important to you. But I want them to be very clear that how much money you have is not your worth, that it has nothing to do with how good a person you are.
3. You can only spend money once
Money is easy to spend. This is a simple lesson best learned when your kids are little and the stakes are small. Nothing teaches a child about the finite nature of money more than running out. Then help kids learn how to prioritise what they want. I gave my kids a few dollars to spend at a local country show. They could spend it on whatever they wanted, but once their money was gone there was no more. They checked out every ride and stall carefully before choosing how to spend their money. It was a simple lesson in prioritising. Another great way is a wish list. Every time your kids find something they want, it goes on the wish list along with its price. This makes it easy for them to learn about making choices: they could have these three small things for the same amount of money as this one larger thing.
4. Wait before you buy
Ever bought your kids something they just must absolutely have this minute, only to see them lose interest a moment later? Even as adults it’s easy to get caught up in an impulse buy. That’s why waiting before you buy is such an important money lesson. When my kids suddenly want something they’ve just seen, I ask them to wait and think about it. I talk to them about how much it costs and ask them to think about if they want it enough to spend that amount of their money. Often the simple act of walking away breaks the impulse. If they decide they really do want it later, then I take them back to make a more considered purchase.
5. Know what you want
Knowing what you want and saving towards that is a great life lesson. Help your kids set a savings goal for something they really want, with a simple chart to help them keep track. It’s also great to teach your kids to be critical of advertising, spotting how ads try to tell them what they want rather than them deciding for themselves.
6. Saving, spending and sharing
Managing money is pretty simple: you can spend it, save it or share it. You can teach your kids this by setting up 3 bags or jars. One is spend, which has no rules. One is save, which has a goal of something they really want and a way for them to track getting there. The last is share. Your kids can choose how they share – perhaps buying a gift for someone special or donating it to a cause they care about. It is an important lesson that while we may never have as much money as others or we want, there is always someone less fortunate we can help.
Set a good example
Finally, it’s important to set a good example. Talk about money. Set up a savings jar for treats or holidays. Show your kids that while you have enough money to meet your family’s needs, even as adults you are always making choices and saving for things your family wants.