10 Ways to Teach Your Kids About Money

10 ways to teach your kids about money|Positively Jane

I have been observing the spending behavior of kids living at home, kids in college, and married ‘kids’.

Have YOU ever wondered why some kids are so careful with their spending? Why do some kids save and plan for their future? And then others are so far in debt, that even at such a young age, they are unsure if they will ever climb out of it? Or why many use those unsolicited credit cards sent in the mail (like it is free money) and others realize those cards need to be throw away? Or some kids drive older cars that they paid cash for and other lease a designer car?

I find it fascinating. 2 totally different schools of thought…not counting all the ones in between.

And then I began to wonder….why? Why are they so different? Why does one group budget and live within their means - even if that means doing without?

Why does one group not save or max out their credit cards? Did no one explain money to them? Were they not taught about credit card interest? Debt? Do they even know what the term ‘financial freedom’ even means? What about college loans? Or low paying jobs that will NEVER pay off that student loan debt? Or financing everything so they can ‘own’ some more?

What happens if those kids lose their job or can’t work anymore? What happens if they need new tires or brakes for their car? Or they have unexpected medical bills?

During my observation and research I learned -
The average pre tax income in the US is about $75,00. 90% of this money gets spent on bills. 90%!
65% of all Americans do NOT save.
Bankruptcy rates in our seniors is at an all time high!

I have also learned - that you if don’t teach your kids about money someone else will. Do you want that to happen?

And then I was thinking -
Besides providing the money for your kids so that you can teach them how to budget (a very valuable lesson), what are other ways you can teach your kids about money? Lessons for the present. Lessons for the future. Life lessons.

As I am sure you already know, kids learn in many ways. Sometimes they learn from being verbally taught. But, mostly they observe and learn. They observe their parents and learn from them. A ‘do as I say and not as I do’ is not valid when learning, When they are older they learn from their friends and co-workers. They no longer ask mom or dad. This is why we, as parents, need to begin early when teaching them about money - length sometimes trumps new and different. It really is all about establishing good habits at an early age. Like brushing their teeth or saying please and thank you.

In order to help you out, I put together a few key areas that will help you begin conversations and explain how money works…really!

  1. First things first - Kids learn best by observation. When they see you budgeting your money, saving and saying no to purchases they are more inclined to follow suit. If they see you buy one in every color…that is how they think shopping is supposed to be.

  2. Say things and mean it like - ‘It is not in the budget at the moment.’ (I used to say ‘we don’t have the money to buy that’ and my youngest daughter thought we were going broke so I changed the way I phrased it.). When Christmas comes around, my adult kids still ask me what Santa’s budget is.

  3. Pay cash for everything, Again, it is all about modeling behavior. You are showing your kids that paying interest is not a good idea. Get the calculator out and show them how minimum credit card payments will amass huge amounts of wasted money.

  4. Explain all about savings and accruing interest. They need to know that they must save for retirement and a rainy day.

  5. Pay them an allowance and then help them budget that money. If you aren’t sure what that really means or what that entails go check out ‘Why You Should You Give Your Kids an Allowance’ and ‘Should Your Children be on a Budget?’. These are proven strategies that have not only worked for me and my family, but for others as well. As they learn to budget their own money they also learn how much things cost, how to save, and how to say no. ALL win wins!

  6. Talk to them about college and student loan debt. Ask them what their plan is to pay off that debt? You may or may not know, but student loan debt has surpassed credit card debt in America!

  7. Show them how to save - whether it’s money or for something else. Write it down. Make a plan. Celebrate when the goal is reached!

  8. Contentment is a big factor with kids. They watch tv and want the latest and greatest. Or their friends have the newest gadget. Contentment is a learned behavior and does not come naturally. If they understand that money does not come from the ATM machine, has to be earned, and there are limited $'s to spend...they might just understand and get the picture.

  9. Avoid impulse purchases. Try not to give in to the whims of the moment. How many times have you gone food shopping hungry? And, what ended up in YOUR cart! I am always attracted to the cookies and snacks! Those impulse purchases can really kill a budget. And aren’t great for our bodies either.

  10. Explain the difference between a necessity and a luxury. Stopping and eating fast food is really a luxury. The 20th pair of earrings is a luxury too. :)

I hope the above will get the conversation started! Have fun with your kids.

I sure do miss my little ones. But, I love the adults they have become! They are on budgets that they stick to. They save for their future, save for cars and save for purchases. AND they pay off their credit cards in FULL in each month! Makes a momma proud.

I have 3 additional posts that you might like to read (in order) -
#1 - Why You Should Give Your Kids an Allowance
#2 - Should Your Children be on a Budget?
#3 - How to Set up a Budget for Your Kids

As always - if you have any questions please let me know.

Big Hugs,

Jane