Parenting is a tough job - because let’s be honest, are we ever going to get everything right? Between the experts, your parent-friends and your own parents, everyone has advice on how to raise your kids. And considering that research shows that parent’s habits become their children’s habits, we'll happily take any advice we can get!
So it's no surprise that the same rules apply to money. In fact, parents will be the single biggest influence on which money habits (good or bad) that their children pick up. Incredibly, your kids can grasp basic money concepts at the age of 3 and by age 7, many of their money habits are already formed.
So to help you avoid becoming a statistic, and to shamelessly add to the pile of parenting advice, I’ve rounded up the best advice from some of my favorite personal finance gurus about how they teach their own kids about money.
We started a Chores & Reward program when Zoey was 5. Every Saturday morning, the kids get up and have three chores they have to do for the family. And as they get older, the chores get harder. Once they've completed their chores, we give them a dollar for every year they've been alive. That money is then split across four jars - spending, saving, investing and giving. We're trying to start investing conversations with Zoey early because we want her to benefit from compounding interest! And with the give jar, she takes the accumulated money every quarter and selects a charity to donate that money to (from a set of options I share with her). And they get a milkshake after they hand over their donations! We've had some really great experiences as a family because of this practice.
My dad was adamant that I learned to save early in my life. So when he first started giving me an allowance, he sat me down and explained the value of saving. But he didn’t stop there! He made me practice it by opening my own savings account at our local bank. To make sure we actually followed through, my dad would match anything my brother or I put in our savings account. I still remember how excited I would get as we walked to our bank branch and put the cash into my account. I would carry around that account balance receipt in my wallet beaming with pride and showing anyone who’d listen! Thanks to him, I never stopped saving.
We taught our twins about money using a series of games and through allowances. When they were young we played games focusing on different money denominations, and the fact that different monies had different values. In fact, an older version of Monopoly Jr. taught my kids that the number on a bill mattered. A one and a five weren't the same. Later, we played the utility game, using a simple chart to keep track of our utility bills as a family. Instead of our house lit up like Disneyland when I came home from work (the reason we started this particular game in the first place), both Nick and Autumn became ruthless about making sure we turned off lights when we left any room. Finally, we used allowances in an aggressive way to help them learn to make better choices with cash. While some parents didn't like the large-ish amounts we trusted our kids with, I'd argue the opposite: I was never trusted with $10 when I was at home, so I made HUGE money mistakes in college later, when my parents weren't with me every day. Both of my kids made early, wasteful choices, but they made them when the stakes were small. Trust kids with money decisions early on and they'll build habits that pay dividends later.
Even before we started giving our daughters an allowance, we tried to teach them about budgets using snacks when they were three and four years old. When we picked up groceries, they each had a 'snack budget' or $5 or under. And while we were at the store together, we'd go over the choices they had - one snack for $5 or two for $5. It wasn’t only good math practice, but it taught them to prioritize what's important to them!
While on a family trip a few years ago, I gave my niece and nephew a quick money lesson. But I didn’t try boring them with the details of compound interest or saving money instead of spending it frivolously (both of which are important!). Instead, I started with, "you can have whatever you want in life. Absolutely anything can be yours. You just can't afford to have it all at the same time. That's why you must learn how to manage your money." I then asked them what it is they wanted right now, and from there, was able to grab their attention by centering the whole money lesson (in this case, saving a minimum of 10% of your money) around their goals. You better believe they listened up!
In my house, you learn your ABC’s and 123’s & how to save as soon as you learn to talk. When my daughter turned 1 years old, we started using her piggy bank. When she earned money for her birthday, we added it to her piggy bank and even added to it if she found a penny around the house. It was important for me to start young, because as my daughter gets older it will already be instilled in her. She’s 6 years old now, and I can see those money lessons paying off!
She may not be a financial expert but after this tip, she might as well be mom of the year, IMO. After Shaketha’s kids were constantly asking her for more allowance and to have their own cell phones, she pulled her mom pants up high and did the cleverest of things. She ran her own at-home job fair and had them apply for different positions. We’re talking actual printed applications for her “Kitchen Manager”, “Laundry Supervisor”, and “Lead Housekeeper” positions. And guess what? Her kids went along with it no problem. She even gave out a rejection letter to her son, who wasn’t as qualified as his younger brother. Shaketha, you’re brilliant in our minds.
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