Teaching your children how to handle money intelligently is a lifelong gift. When many of us hear this, it evokes images of parental lectures about the value of a dollar and mowing lawns for a few bucks. It goes beyond that, however. Really weaving an understanding about money and how to handle it is something parents need to do deliberately. Helping your kids learn how to handle money also helps them become more independent.
Here are some suggestions on how to help your kids become money smart.
Watch What You Say and Do
Just when you think they’re not listening, children pick up on things you say and do. If you are always complaining about money, for instance, your children may pick up on this and develop a skewed idea of what money is and does.
Be aware of what your child sees you doing, too. If you always pay for things by credit card or by getting cash from the ATM, take a moment or two to explain to your child what’s really going on. Real money still has to pay for those things; plastic cards and machines don’t just give out money.
Include Your Kids
While it’s not a good idea to make your kids sit through a recitation of all your bills, try to include them in some of the financial goings-on around your home. As soon as your child can count, begin at the very beginning: teach them the names and values of coins. Seize the moment to point out realities about money – if your child complains about how much a parent works, explain that working is how we get money and money is what we need for food and clothes and toys.
Make It Real
For young children, playing “store” can be an important lesson not only in math but in money management. Using play money, set up a store and price items in your house appropriate to your child’s age level. Give her a certain amount of money, and show her how there are some things she has enough money to purchase and some things she can’t.
One key to being money smart is learning to control impulse buying. This doesn’t mean that you never buy anything on impulse – sometimes an unexpected sale really is too good to pass up – but it does mean that impulse buying should not characterize how your child deals with money.
One way to help offset this tendency to be impulsive with money is to help your child earn and save up enough money to buy something special that he wants. In this day and age of credit cards, young people often get this backwards – buy the item now, pay later. Help them understand it the other way around.
It’s worth noting that you probably can’t expect your child to avoid credit cards and loans altogether. So teach her how to use these financial tools properly.