For many parents, the money talk is almost as feared as the birds and the bees talk. It is also an important talk to have with your children. Just as your children figure out that someone helps a baby get into a woman’s tummy, they know that money happens. It is needed and it moves around them. Helping your children understand money at an early age will help them build good money habits as adults. It will also help you tell your children “no” when you need to.
1. Start when children begin learning. As young as 4 years old, your child can learn to save. Get your child a piggy bank (we use the one at the link) and help him or her save up coins. Combine early counting and math lessons with money saving lessons by counting the coins and depositing whole dollar amounts into a child’s savings account at your bank. Let your child see how the account grows each month.
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2. Include them in the budget talks and activities. As early as 8 or 9, let your kids see how you budget and pay bills. Don’t be afraid of “stressing” your child. Children face more stress when things are unknown (think of the fear of the dark, the closet, or under the bed). Kids typically learn this age about decimals and bank accounts at school, so it is a perfect time to include them.
Let them practice math skills by doing addition and subtraction with you. Talk about why you budget things a certain why, why certain bills are paid this week over next week, and why you are putting money into savings. Show them your retirement savings as well, so they understand how important saving for the future is to you (that will impress upon them at this age).
3. Be honest. Don’t pretend to have more or less money than you do. If you are pinching money to save, explain what you are saving for and why, so they understand why even though you have a few extra hundred to put aside each month, they are still not getting that hot new game.
4. Set an example. If you are not going to splurge on your kids all the time, don’t splurge on yourself all the time. If you do like to have a weekend every few weeks or every few months (depending on your budget), then make sure you have it set aside for both you and the kids. Let them see this money build up and if they want extra money for their splurge, suggest extra chores they can take on to earn that extra money. Make sure your child sees how all the important bills and savings happen first before any splurge takes place.
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5. Do not just give your child an allowance. Whether you give your child an allowance to just have free spending money, as a reward for chores, or both, do not just hand over the money and that is it. Talk to your child about what he or she plans to do with that money. If your child has wants something big, help your child develop a strategy to pay for it with the allowance money s/he saves up.
Have you started talking to you kids about money yet? What are your best tips?
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