Even when we don’t talk about money with our kids, they absorb plenty of information about what we value from the daily choices we make.
When we include financial conversations in our interactions with our kids, we help to equip them for a stronger and more stable financial future. From saving allowance money to using a debit card for the first time, money conversations should take place throughout childhood at an age-appropriate level.
Starting Early: Preschool and Early Elementary
Even very small children start formulating ideas about money and its place in their lives. Parents can start to explicitly state and model their views on savings, spending and value. It’s a fun age to play pretend with money while also imparting some useful lessons.
To help young children start learning about money, try these tips:
- Give them a fun piggy bank, then work weekly to put money away in it and encourage saving
- Discuss whether items are “needs” or “wants” during normal everyday shopping excursions and grocery runs
- Give them opportunities to earn small amounts of money through extra chores
When you start early, you give your younger children a lens through which they can see and manage money as they grow older. The key is keeping it relatable and tying it back to everyday experiences, instead of just discussing abstract topics that seem unrealistic.
Elementary Years: Building on the Foundation
Once you have a basic foundation, you can start focusing more deeply on financial lessons. Working on these four topics with your children will make money management an easy and normal topic to discuss and to keep top of mind.
Budgeting:
Give them a simple plan to save, spend and share their funds. Depending on your family’s desires, you may decide to give them an allowance, pay them for household chores or grades, or help them to allocate birthday and holiday gift money. Set expectations upfront so they know how much to expect and how much to save versus spend.
Saving:
It can be hard to say no when they beg and plead for big-ticket items, but it’s also a great opportunity to help them save toward a goal. You can even track their savings on a chart so they have a visual goal to achieve.
Wise spending:
Kids love acquiring new things (and so do many adults!). It’s important to talk with kids about impulse spending and about making sure they are choosing wisely to balance wants and needs. You can have these discussions when they ask for a new cuddly toy on a shopping run or when they want fast food or ice cream instead of a home cooked meal. Talk through how you make room for things in your own budget and how you balance fun with necessary expenses.
Valuing money:
As a kid, it’s easy to think that parents have unlimited funds available, especially when you see purchases being made with a debit card or a tap of a phone. You can use Monopoly money or play games where kids make “purchases” to see the value of money in action or can let them do entrepreneurial ventures like selling lemonade or cookies to see how money is made.
Older Teens: Getting Ready for the Real World
As your children get closer to moving out on their own, you want to make sure they have the financial acumen to manage their own money and to successfully work toward their goals. You’re giving them a foundation through education and training, but they need to be ready to put it into practice.
Some steps to take before they leave the nest include:
- Setting up a savings account for your teen. Andrews Federal offers a Cash Commander account that gets young people started on the path to responsible financial management.
- Establishing a checking account with a debit card, so they can get accustomed to spending and to monitoring their expenses
- Developing a budget that includes savings, needs and wants, so they don’t overestimate their funds when they have free rein to spend
- Discussing debt and ensuring they understand the impact that credit card interest or educational debt could have on their future.
And, make sure they know that if they have challenges, they can come to you. You are the advisor they’ll continue to rely on as they grow older and have more opportunities to test their spending habits and flex their savings muscles.
Wondering what else you can do to ensure your children have the financial resources they need to succeed in the future. Talking openly about finances and setting a good example will help them see how money management works in real life. Let them see you:
- Creating a family grocery budget and meal planning
- Putting money away for college
- Budgeting for school clothes and back-to-school shopping
- Paying bills on time and setting up online bill pay
- Choosing a vacation destination and activities while staying within a set budget
- Evaluating credit card points/rewards programs, annual fees and interest charges
The more conversations you have, the less stressful it will be and the easier it will be for your kids to come to you about their money questions and concerns.