Simple Solutions To Financial Freedom

What Parents Should Teach Children About Money

On Behalf of | Aug 27, 2018 | Education |

There is a big disconnect between what parents should be teaching their children about money and what children are actually learning.

“Money doesn’t grow on trees.” And, “If you want something, save your allowance.”

These are classic quotes that Baby Boomers had drilled into their minds as young children. Times were simpler then. In 1965 your 50-cent allowance could keep you in penny candy and baseball cards until the next week.

However, now children rarely see or handle cash thanks to technological advances that have us swiping and waving our plastic cards to make even the smallest purchase.

So what lessons are children actually learning about money from their parents?

In an article about the best and worst money advice, regular people were asked what they learned from their folks:

“They didn’t give me any advice because economically they were not well, so this is what I learned from scratch.”

“They probably encouraged me to save money but I never did, yeah I’ve never been able to do it.”

“They really, unfortunately, didn’t teach me a lot. They weren’t great at finances so I had to learn from other people … and I’m still learning.”

Parents, we can do better than this. As experts in the field of people struggling with money, we offer a few pieces of advice for parents.

Talk about money.

It doesn’t matter the age of your children. It is never too soon to talk about money and its value. Help children understand the importance of saving for something they want. While it may be possible and easy to just purchase a toy or article of trendy clothing just because your child asks for it; help them understand the value of saving.

The joy of giving your child the unexpected gift of a toy they’ve desired is short-lived. Helping them save their coins and watching the money grow until they have enough to make the purchase themselves is not only more satisfying, it is also teaching a lesson far greater than the gift could ever be.

Demonstrate the Value of Savings

When we keep an open dialogue with our children about money we can also share our own journey to save for what we desire.

So often, rather than saving for a new television or computer, we just put it on our credit card. From the child’s perspective, one day you don’t have a computer and the next day you do. There is no discussion about the cost, or demonstrating the value by showing comparisons to items they can relate to. For example, a computer is worth the same as three baseball mitts, five computer games and a new pair of Air Jordan sneakers.

If they had to save up to earn a baseball mitt, they will remember how long that took. Now they have some sense of just how much a computer will cost. Use the same process to save up for your computer and make that visible to your children.

Use the same process for a family vacation or a new set of golf clubs. Let your children witness your earnest efforts to save for something you want and encourage them to do the same.

Hire Your Children

One way to help your children experience real-life money handling is to hire them for tasks around the house. These can be regular chores, if you don’t give them an allowance, or they can be special jobs that may take a little longer.

This process offers a number of lessons for your children. Explain the job in detail. For example, cleaning out the garage, what does it entail? Sweeping out the garage? Are there additional steps like throwing away broken items that have been stored in the corner? Perhaps you will want them to wash the garage windows or neatly stack the garden tools.

Talk with your child about how many hours you think it may take them. Negotiate a fair hourly rate. The amount of money isn’t really the point, but the opportunity for your children to experience equating work with time with money is an important lesson.

One parent pays his children in silver coins.   He reports that most of his children have kept the silver and have become experts in the silver market.

The Lesson of Giving Back

The Bible teaches that “it is more blessed to give than to receive.” (Acts 20:35) Just as important as learning the value of savings, it is equally important for our children to understand and demonstrate compassion for others. Whether that means creating two savings accounts, one for our own desires and one for others, or by giving of our time and gifts, our children need to learn the importance of giving back.

Parents: Teach Your Children Well

Teaching our children about money isn’t just a “one and done” type of responsibility. As many of the adults interviewed shared, the lessons about money were either vague or not thorough enough to actually impact their behavior as adults.

Young minds require repetition when it comes to learning new things. If they hear you talk about it, see you do it and then participate themselves; the lesson will be more likely to become a habit they carry into adulthood.

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